The month in review: South West WA
By Herron Todd White
Demand for vacant land in the south west of Western Australia is strong. For an extended period of time there has been an undersupply of vacant land and it has only been in the past twelve months that developers have really started to release land to quench the demand and capitalise on strengthening values.
Following the Global Finical Crisis many developers throughout the south west stopped releasing land. This was on the back of a considerable drop in land values and also high development costs. Consequently the profit margin was eroded and we saw land developers exiting the market. Over the following years the population in the south west continued to grow and as such demand for new housing started to strengthen.
However, there was very little land available throughout the south west apart from an oversupply in Margaret River, which was struggling from a lack of industry to support jobs. So throughout the course of 2014 developers started to once again release land and we have now seen new subdivisions in the localities of Yalyalup, West Busselton, Vasse, Dalyelup, Eaton, Australind, Dunsborough and Kealy. The influx of land to the market has seen the demand to supply balance improve.
Current entry point into these estates ranges from $150,000 to $250,000 depending on the size and location of the property. As these lots are now starting to sell strongly there is consequently a flow on effect to the building industry. With this increase in demand building contracts have now firmed and started to increase after numerous years of hard competition between builders vying for the limited market.
Smaller lot developments in the new subdivisions have become popular due to their affordability and it is anticipated that a move away from large homes to smaller, better appointed homes on small blocks, with limited gardens and the ability to lock and leave will be a trend going forward.
Overall it is likely that the demand for vacant land will still be strong in the short term until the equilibrium between demand and supply has been met.