NSW, VIC tie for most expensive residential land

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By Leith van Onselen

The Australian Bureau of Statistics (ABS) has released its 2012-13 Australian System of National Accounts (ASNA) data release, which provided a detailed presentation of annual national accounts data.

Locked away on Table 61 was my favourite section of the release: data on aggregate land values at the state and national levels. This years release confirmed that, at a national level, the land values underpinning the Australian house prices rebounded after two consecutive years of decline, with all states and territories recording growth in nominal terms but at differing rates.

The release yesterday of the annual state accounts by the ABS has enabled me to calculate residential land values as a percentage of gross state product (GSP), which provides a measure of relative valuation as well as potential over-under valuation.

As shown in the next chart, residential land values to GSP grew in all states and territories in the year to June 2013, with the exception of South Australia, where growth was flat. However, values remain below their peak across all jurisdictions, with values heavily underwater in New South Wales (-23%), Queensland (-25%) and Western Australia (-34%).

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Looking at the time series, you can see that New South Wales and Victoria are tied for the most expensive residential land, although both are below the nose-bleed levels reached in 2004 in New South Wales (2.9 times GSP):

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  1. Hugh PavletichMEMBER

    Thank you Leith.

    It would be interesting to see these numbers lined up against the United States and Texas… plus the actual housing stock value as well.

    Residential housing and land should be well below 1.5 times GDP / GSP / GMP and 3.0 times annual household incomes … refer Demographia Survey http://www.demographia.com .

    Houston residential housing AND land is about 1.1 times Gross Metropolitan Product for example.

    From the above, it should be quite simple to quantify the bubble value of the Australian housing market and the bubble mortgages as well. Then relate the latter to the Banks capital base.

    Hugh Pavletich

  2. NSW land values down 23% from the peak?

    Are you sure?

    Or is this a very lagged indicator based on UCV’s that might on average be 2 years old, plus a futher delay in compioling the info by ABS.

    My guess would be that Sydney residential land values are now very near or above their prior peak in nominal terms.

    The rest of the state could not have that much impact in value weighted terms.

  3. Thanks Leith. I am so proud my state Vic is snotting NSW. Oi! Oi! Oi!

    Vics are accused of snobbishness. We are merely proud to have the most expensive land/GSP. Those pesky, price-sensitive FHBs can go live somewhere else.