Although Melbourne’s outer suburbs remain some of the most affordable housing areas, an influx of new residents to these areas have significantly pushed up property values over the last 12 months. Housing affordability has been a key issue in recent times as a result of surging house prices despite continuous rises in interest rates. According to research from property group Oliver Hume, the cost of land in Melbourne’s outer growth areas is likely to eclipse the cost of building a house.
The median land price in Melbourne’s growth precincts of Wyndham, Casey, Whittlesea and Melton rocketed 24% in the past 12 months to $212, 750 last quarter. The average cost of building a new home has risen to $216,097, leaving a gap of just over $3,000 between land price and construction cost.
Rising land cost in Melbourne’s most affordable suburbs were likely to exacerbate the housing affordability crisis where the average price for a house and land package on the city’s fringes is around $430,000. Oliver Hume research founs that rental vacancy rates in outer suburbs dropped to 0.8% which is lower than other metropolitan areas while the average weekly rent for a three bedroom home rose by 8%.
In June, the Brumby state government released 43,600 hectares of land out of which 24,000 hectares are suitable for development along the growth corridors to boost land supply and pave way for $134,000 extra dwellings. Master Builders Association chief executive Brian Welch said there was a lack of awareness of the housing affordability crisis. “The most basic thing, which is accommodation, is not given the attention it deserves,” he said. Despite the urban growth boundary expansion, the state government failed to maintain an adequate buffer of land supply, he said.
The above are excerpts from the article Surge in outer area land costs, The Age, 10 November 2010
- Time for Melbourne to think about the population growth, News.com.au, 19 October 2010