Professionals Real Estate 
The median price of a block of land over the past year in Perth has jumped by $40,000 according to Shane Kempton, CEO of Professionals Real Estate Group.
Mr Kempton said the latest REWIA figures show that the median house price for a block of land was now around $280,000 compared to $240,000 during 2013.
“The growing demand for land has been driven by first home buyers as well as upgraders who are taking advantage of low interest rates to build a new home. This rising demand for building land has put pressure on supply resulting in rising land prices after several years of stagnant growth in the residential land market. The growth in land prices will have a positive ripple effect on established suburbs in outer Perth areas that border new estates such as in Wanneroo, Joondalup, Midland, Armadale, Rockingham and Mandurah.”
“Traditionally, people who want to build a new home, view established properties in nearby areas and if it cost less to buy an established home is more competitive compared to building, then they will buy an established property putting an upward pressure on their value.”
“Professionals are already seeing the values of established homes in areas such as Safety Bay Warnbro and Waikiki rising because of rising land prices in nearby Baldivis. A similar trend is also occurring in the northern suburbs in areas such as Clarkson and Mindarie.”
“Overall, the outlook for the residential land market in Perth remains positive with WA’s strong population growth continuing to underpin the long term demand for new homes,” he said.
Tips on buying a block of land
- Property buyers should consider is that land appreciates in value while the value of actual home structure depreciates. Therefore buyers should choose a block that will offer the greatest potential for capital growth. When considering the long term capital growth potential of a building block, home buyers should take into account the scarcity factor of the block.
- Ultimately it is this location factor which will determine the longer term capital growth of the block.
- If the location of block is in an area where developers can easily replicate the housing development in a nearby area for the same cost price, then the potential for capital growth is limited. However, if the lot is near a river, the ocean and a major urban centre with good social infrastructure with limited building land, then the potential for capital growth is much higher.
- The specific location of a block in new housing development is very important because blocks that are located on a quiet street or opposite a park or school will appreciate in value at a much greater rate.
- The quality of the housing estate is also important. Home Buyers now want to live in estates which are planned to a very high quality with park lands, walkways and an impressive entrance.
- Branding is therefore very important when buying a block of land and an estate which has an exclusive image will encourage home buyers to pay premium property prices over the longer term i.e. Dalkeith in Perth is the most expensive suburbs in Western Australia because of its strong branding image.
- The size of the block is also important since blocks sizes are now getting smaller and you should determine the value of the block by comparing the square metre size of similar located blocks in similar developments.
- If you are a first home buyer, consider buying a lot in a well located estate that offers additional benefits such as fence and landscaping packages. These benefits can prove important if your financial situation changes during the construction of the home.
- Avoid buying a block with a narrow frontage or a block that is slopping as these types of blocks are penalised in price when resold.
