Canberra land prices may have peaked

Almost two-thirds of packaged lots in Throsby fell short of the reserve price at an auction on Wednesday, suggesting the price of land in Canberra may have peaked.

Nine of the Land Development Agency’s 28 lots sold under the hammer and a further two sold immediately after auction.

The price of these lots averaged $1142 per square metre.

The 28 packaged lots comprised a total of 96 single residential blocks, most of them measuring 250 square metres.

Each lot contained between two and six blocks and builders purchased most of the packages.

More than 40 parties registered to bid at the auction and each lot attracted active bidders.

Colliers International general manager of land marketing Shane Radnell said bidding on the remaining 17 lots was just below reserve and the company was negotiating with the highest bidders.

Mr Radnell said he expected the sales would be finalised within the next few days.

“We’re reasonably confident that the under bidders will purchase at the reserve price,” Mr Radnell said.

“[The reserve price] is indicative of the prices we achieved at the first Throsby auction.”

However, industry experts believe the results indicate that the price of land in Canberra has hit its peak.

Master Builders ACT executive director Kirk Coningham said the price of land has become uneconomical for builders.

“It comes to the point where it just becomes too expensive to build a home and extract a profit, particularly on smaller blocks,” Mr Coningham said.

“When you’re getting over $1000 a square metre, it’s some of the most expensive land in Australia for residential building.”

The first release of packaged lots in February netted almost $17 million, which was well above reserve price.

These packages ranged from 2015-square-metre sites for six homes through to a multi-unit 7941-square-metre site permitting up to 24 dwellings.

A further 106 single residential blocks were sold in February, attracting 800 registered parties. The auctions were fiercely competitive with blocks selling for an average of $108,000 over reserve for a combined total of $48 million.

The single residential blocks sold for an average of $920 per square metre.

Mr Coningham said buyers eager for a slice of land in an under-supplied market were willing to pay these prices, however it was more difficult for builders who needed to turn a profit.

HIA ACT/southern NSW executive director Greg Weller said the rising cost of land was “concerning for the industry” and more builders were looking outside the ACT for affordable land.

“Builders are finding it difficult to secure land that they can build an affordable product on,” Mr Weller said.