By Herron Todd White
To help spur on the building industry through the COVID-19 pandemic, the federal government announced the Home Builder Program on 4 June. The program provides $25,000 grants until 31 December to those constructing a new home or substantially renovating an existing dwelling. The stimulus put in place to support the construction industry has had a compounding effect on the property market with demand for vacant land increasing rapidly throughout July and August. This increase in buyer enquiry has been felt across both estate subdivisions and established suburbs.
Large estates can be found at the extremities of the greater metropolitan area. Estates are typically centred around existing infrastructure, with the suburbs of Mount Barker south–east of the CBD, Angle Vale north of the CBD and Seaford Heights south of the CBD generating the bulk of land transactions within metropolitan Adelaide. Over the past six months there have been 353 vacant land settlements within these three suburbs alone.
Mount Barker is located within the Adelaide Hills, 35 kilometres south-east of the CBD. This satellite suburb expanded rapidly after the establishment of the Heysen Tunnels on the South Eastern Freeway which is the major route connecting Mount Barker to the CBD. There are upwards of seven estates actively marketing land within Mount Barker, each targeting varying market segments. Allotments range in size from 130 square metres to larger 1000 square metre sites and vary in price from $85,000 to $265,000. An example of what’s available is 18 Eucalypt Street, Mount Barker which is a level, regular shaped allotment of 1,000 square metres which achieved a sale price of $255,000 in August.
The establishment of the Northern Expressway in 2010 and the recent completion of the Northern Connector has seen an increase in the development north of the CBD. Historically a satellite suburb, Angle Vale has established itself as one of northern Adelaide’s fastest growing suburbs. This suburb has been popular with young families, providing a small town feel in an expanding metropolitan area with the added bonus of Trinity College’s Gawler River Campus being central to the township. Allotments range in size from 300 square metres to larger 800 square metre sites and vary in price from $160,000 to $250,000. An example of what’s available is 9 Woodbridge Drive, Angle Vale which is a level, slightly irregular shaped allotment of 781 square metres which achieved a sale price of $249,000 in August.
Seaford Heights is located approximately 35 kilometres south of the CBD and is accessible via the Southern Expressway. This suburb was established in 2014 as demand for land grew in the region and is popular for its proximity to Moana Beach, the McLaren Vale wine region and the Fleurieu Peninsula. Allotments range in size from 240 square metres to larger 750 square metre sites and vary in price from $160,000 to $245,000. An example of what’s available is Lot 2 Rockport Road, Seaford Heights which is a moderately sloping, regular shaped allotment of 450 square metres which achieved a sale price of $177,000 in February.
Land being purchased within these estates typically forms part of a land and build package. Single and two-level brick veneer homes characterise the type of dwellings being constructed. Depending on building specification and dwelling size, construction rates vary between $1100 and $1600 per square metre. Established new builds in these locations are achieving prices from $300,000 and reaching a ceiling at $600,000. Buyers entering this market should always be aware of the established price point of an area to avoid overcapitalising. Representative of these price points are the recent sales of both 24 Cleland Street, Mount Barker and 30 Fradd Road, Angle Vale. Purchased as a vacant 315 square metre allotment for $142,000 in late 2018, 24 Cleland Street, Mount Barker was then improved with a single level, brick veneer dwelling disposed as three bedrooms and two bathrooms. The property recently sold or $410,000. Purchased as a 630 square metre vacant allotment for $209,000 in late 2019, 30 Fradd Road, Angle Vale was then improved with a single level, brick veneer dwelling disposed as four bedrooms and two bathrooms. The property recently sold for $510,000.
Demand for vacant land has not just been at the extremities of metropolitan Adelaide with both the inner and middle inner rings seeing an uptick in demand. Vacant allotments are typically a product of a single site subdivision resulting in allotments ranging in area from 300 to 450 square metres. Looking broadly over the middle ring, vacant allotments are achieving prices between $180,000 and $450,000. The sale of 16B James Street, Campbelltown represents what’s available in the middle ring. This sale comprised a near level, slightly irregular shaped allotment of 361 square metres and achieved a sale price of $340,000.
With tighter development constraints restricting density levels within the inner ring, allotments typically range in size from 450 square metres plus. Historically, plus or minus $1000 per square metre has been the hinge point for vacant land within the inner ring. The July sale of 83 Seventh Avenue, St Peters sent chins wagging with a price of $837,500. This is a 515 square metre, regular shaped allotment with two street frontages located opposite a reserve. The sale equates to $1626 per square metre.
Throughout the inner and middle rings, new builds are achieving prices anywhere from $600,000 for higher density courtyard style homes to $2 million plus for extensive family homes. With up spec-ed building works, costs can range anywhere from $1400 to $2500 plus per square metre of building area. Providing an indication of land and build is the sale of 13 Sixth Avenue, St Peters. Purchased as vacant land for $950,000 in mid 2017, this 691 square metre allotment was then improved with a two-level, high quality dwelling disposed as four bedrooms and two bathrooms with a swimming pool. The property recently sold or $2.695 million.
The home builders grant has seen demand and price points increase for vacant land across metropolitan Adelaide. In the short term, demand for land and new construction is expected to remain strong. In the long term, it’s a relative unknown as to whether land values have been artificially inflated or whether a new floor has been set for base vacant land price levels across the board. A greater understanding of the effect this has had on the market will be known once the data for the first quarter of 2021 is released.
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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.