Property industry's warning on Canberra land release program should be heeded

There are now early signs that the price of land in Canberra may have peaked and industry experts are warning this is not good news for the territory.

The price of the 28 lots sold under the hammer on Wednesday averaged $1142 per square metre – which puts the price of residential land at some of the most expensive in the country.

Almost two thirds of the lots offered fell short of the reserve price on the day.

This could be because the Land Development Agency set the bar too high expecting the huge interest in territory land to continue following strong results in single-block auctions in the suburb.

Alternatively it may represent concern from builders that 250-square metre blocks do not provide a return opportunity worth investing in.

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

The Housing Industry Association's Greg Weller suggested the rising cost of land was a concern and that more builders were now looking outside the ACT.

Buyers of single residential blocks in earlier Throsby auctions paid over the reserve price for the land – and this is typical in an under-supplied market.

But there are more land releases planned in the territory – including one the chief minister has already shown strong criticism towards.

Andrew Barr says while he would not have allowed the re-zoning of the CSIRO's land at Belconnen, he does not expect it to interfere with the land release program – "I think some competition there is a good thing".

According to the recent territory budget the government is set to secure $629,801,000 of revenue from its indicative land release program for the next financial year.

The ACT government would do well to listen to the warning of the industry that the price of land could well have peaked – that may have some longer-term implications on the budget bottom line.