Trading Room home page

Demand for residential land mixed

Market watch top headlines

Australian reports

World reports

Stocks to watch

AQG, BXB, GMA, NBL, RMS, TAH, TAP,

AAP

November 26 2012, 00:01AM

MELBOURNE, Nov 26 AAP - Demand for residential land is likely to be mixed over the next year, according to industry analyst and economic forecaster BIS Shrapnel.

In its latest report of its Outlook for Residential Land, which was released on Monday, BIS Shrapnel said "green shoots" had emerged in the demand for residential land in Sydney, south-east Queensland and Perth, with more positive signs to continue through 2012/13.

But housing lot production in Melbourne and Adelaide was expected to remain in the doldrums.

BIS Shrapnel said low interest rates, weak house and land prices and a shortage of dwellings would support the land market in Sydney, south-east Queensland and Perth.

But demand for land in Melbourne and Adelaide was expected to remain subdued despite lower interest rates.

BIS Shrapnel said Melbourne and Adelaide had experienced a strong residential rebound after the global financial crisis, with the consequent high level of housing lot production and solid growth in land prices resulting in little pressure on the demand for new homes and land.

However, the emerging upturn in Sydney, south-east Queensland and Perth would be slow to gain momentum, BIS Shrapnel.

"Concerns about the outlook for the local and world economy, as well as employment prospects, are expected to make potential new house buyers hesitant, with only modest growth in lot production and minimal rises in land prices expected in 2012/13," the forecaster said.

"With the likelihood of continued low interest rates through 2012/13, and evidence that the residential markets are showing growth, a stronger rise in the demand for new houses and land is expected over 2013/14."

Lot production in Melbourne and Adelaide was likely to continue to fall, with the possibility of a further decline in prices, and/or increases in buyer incentives also occurring.