Land prices in Perth soar in line with record sales

The noise in Perth’s residential property market continues to grow, as more interstate and international arrivals join the hoards of domestic purchasers of both established stock and vacant land. Not only has this meant record land sales but land price growth in Perth now leads the nation.

Land prices in Perth strongest in the country

In the 2023 calendar year, Perth’s median land values achieved the highest annual growth in the country. CoreLogic, alongside the Housing Industry Association (HIA), recently published their December 2023 quarter residential land report, highlighting that the average median lot price across the country’s capitals hit $369,500 by the end of the year.

Business News broke the story this month, hailing Perth with the highest annual growth with a 13.7-per cent increase in 2023, establishing a median lot price of $267,250. Interestingly, this is only a 10.4-per cent increase from 10 years ago, showing the immense growth the post-pandemic period has brought to the west’s residential values.

Unsurprisingly, Sydney clocked the biggest price tags for land, with a median of $660,000 (3.1 per cent growth in the 2023 calendar year). Brisbane trailed Perth’s growth with a 9.4-per cent increase, achieving a median price of $325,000.

While property is still affordable in the west (compared to the east coast), the question remains: For how long? Demand will have a lot to do with the future of land prices. Speaking of demand, it’s not just land price growth seeing new highs in Perth.

Perth land sales hit new record

Land sales in Perth rocketed 92 per cent in the 2023 calendar year, an increase not seen since the peak of the current boom (some would say stimulated by 2020’s government stimulus rollouts).

According to API Magazine, the surge in sales volumes were mainly recorded in growth areas in the North Eastern and North Western corridors. Interestingly, these are the two precincts we’d highlighted last week as recording WA’s most notable population growths in the year ending June 2023: 

In the west, Perth’s northeast and northwest corridors saw notable increases, with 16,959 and 14,885 respective new arrivals.

How did this all happen?

Population growth has of course been a factor. But who are the buyers responsible for this burgeoning land price and sales growth in Perth?

In the 2023 calendar year, 37 per cent of land buyers were investors while 29 per cent were first home buyers. It certainly makes sense the latter group makes up such high volumes. As property prices continue to rise, more properties become out of reach for the average buyer—particularly for those with more modest budgets, the majority being first-time home owners.

First home owners (and those with modest equity and income to leverage for their next purchase) will lean into the accessible pricing of land, in the hope they’ll be able to afford to build on their lot in the near future. Meanwhile, wise investors know that the first property assets to bolster at the tailend of a hot market is land. This is because, as prices continue to rise, even more buyers will be priced out of the established market. Vacant land then becomes the next most feasible option. (This is the theory anyway. No one has a crystal ball.)

There are of course other factors involving Perth’s natural upward trajectory, given it is one of the most affordable capital cities in the country. The major issue for buyers in the west (or the major good news story for those with skin already in the game) is that supply is just not there to match the drastic increase in demand.

What does increased land sales mean for Perth’s property market?

Perth’s record land sales and price growth boom are perhaps indicators that more West Australians are being priced out of the market—an unsurprising truth to most, given the spotlight on our residential market.

While first home owners and property investors make up the majority of new land owners, they could be joined by even more interstate and international arrivals eager to put a roof over their or prospective tenants’ heads. Unfortunately, due to the nature of building wait times, the acquisition of vacant land won’t ease the supply issues plaguing our property market. With time, labour and building material costs will likely continue to soften, so these landowners can fulfil their most basic human need.

For savvy investors, however, this all bodes well to their story of investment success—that is, if they own Perth residential stock.

The market will not come off the boil anytime soon, with all indicators—from demand, to supply, to wage growth, to relative affordability—all leaning hard into the fact that increasing property values are here to stay in WA.

Want to join the residential market but don’t know where to start? At Properties & Pathways, we believe in a shared investment journey. Which is why we pool our funds with other like-minded investors to go after big league residential and commercial real estate. 

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