Herron Todd White Valuers – Month In Review
As published by Herron Todd White Valuers
Having very few COVID-19 cases in regional Queensland together with government stimulus packages is underpinning the current boom in demand for vacant land and new house construction. Builders across Toowoomba and the broader Darling Downs region are reporting unprecedented levels of interest. Demand is coming from first home builders but also from upgraders and retirees moving in from western Queensland.
Until recently, there was a selection of housing estates around the Toowoomba periphery that contained residual vacant land stocks that had proven difficult to sell to local buyers. Suburbs containing a selection of these estates include Cotswold Hills, Highfields and Kleinton.
Developers are now fast-tracking further subdivision stages that had previously been earmarked for development at some point in the future. A challenge to the industry remains the cost versus value equation. In some instances, the cost of house construction plus land may exceed the property’s achievable value due to competition provided by existing product.
However, the established housing market is also trading well with agents reporting strong buyer enquiry and a shortage of listings, which is helping sellers.
To date, there has been no significant uplift in vacant land prices however it is reasonable to expect developers to increase pricing in line with demand. Below is the 15 year trendline for vacant land sales and median price in the Toowoomba Regional Council area:
In-fill vacant land lots remain thinly traded due to a shortage of supply. Changes to local planning guidelines after the unit construction boom between 2012 and 2015 reduced housing densities in some suburbs which has significantly reduced the number of hatchet lots being developed.
The supply of housing to the market is reducing which is helping the upgrader sector of the market. Agents are reporting both local and absentee investor interest including buyers from interstate who are often happy to buy sight unseen.
It is reasonable to expect a market correction at some point in the next twelve months as government stimulus packages reduce over time. Builders are likely to be busy well into 2021 and this will have a positive flow-on effect to other sectors of the local economy.