You probably already know that the property market is red hot right now. Real estate agents are struggling to keep enough stock on the market, while some buyers are putting in offers sight unseen. Fear of missing out, or FOMO, has never been more prevalent.
But as with everything, the devil is in the detail. Some types of property are proving more popular than others. The market for inner city apartments on the east coast, for example, is fairly slow.
The type of property that’s seeing the most interest?… Vacant land
Why is land so popular?
The HomeBuilder grant arguably kicked off the trend. HomeBuilder offered eligible owner-occupiers a $25,000 grant to either build a new home or substantially renovate an existing one. It differed from other grants in that it wasn’t limited to first home buyers. It merely required that you:
• Earned no more than $125,000 as an individual or $200,000 as a couple
• Were planning to spend between $150,000 and $750,000 on building or improving a home
• Signed the contract between 4 June 2020 and 31 December 2020 to receive the full grant, or between 1 January 2021 and 31 March 2021 for a reduced $15,000 grant. Construction must commence within three months after the contract was signed.
CoreLogic recently announced that demand for residential land jumped a huge 27.7% in the September 2020 quarter, on the back of the HomeBuilder grant announcement. Meanwhile, the ABS reports record numbers of new house approvals in December 2020 and again in February 2021.
While the scheme has now ended, it started a wave of new home builds that shows no sign of stopping.
The desire for more space, your way
The longer-term effects of the COVID-19 pandemic have tied into an existing structural change. Buyers are increasingly willing to live in regional Australia, or the outer suburbs, in order to afford somewhere spacious.
In an era when technology makes it possible to working partly or wholly from home, it’s more important than ever to have a space that works for you. Real estate agents report a surge in interest for homes with a study or home office. Regional areas have also experienced high demand, as they offer the opportunity to own a larger house for less money.
The natural progression, then, is to build a home with a layout to meet those needs. Whether you use an architect for a custom design, or choose an existing floor plan from a home builder, there are plenty of alternatives. Perhaps you want a space for the kids to do their homework while you keep an eye out from the kitchen? Or an en suite for every bedroom? Or a garden big enough for everyone to get fresh air and exercise?
Is now the time to sell land?
If you own land and you don’t have immediate plans to build on it, the current boom might make for the perfect time to sell. While HomeBuilder has ceased, interest rates remain as close to zero as they’re likely to get with the RBA holding the cash rate at 0.10%. First home buyers can still take advantage of generous First Home Buyer grants in most states and territories, many of which are focused on new builds.
Notably, there’s also a new uptick in investor activity. Investors, who couldn’t take advantage of the HomeBuilder grant, were fairly absent in the market in 2020. However, the ABS recorded a 9.4% jump in investor loans in January 2021, and 12.7% in March. If this trend continues, it will more than compensate for any drop in first home owner activity.
Either way, one thing is clear. If you’re holding onto land, now might be the ideal time to finally let go.