Demand for land in Wagga is continuing to increase despite pandemic interruptions, according to the annual Fitzpatricks Real Estate report.
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With the $25,000 HomeBuilder grant increasing demand for land, the report found Wagga has a "desperate need for more lifestyle blocks."
The report covers local population and residential and commercial market trends for the 2019/2020 financial year, which concluded after the coronavirus pandemic slowed the market over lockdown.
Despite this, house prices rose 4.66 per cent across the year and unit prices by 12 per cent.
While house sales decreased by four per cent, 172 units were sold compared to 102 the previous year.
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Fitzpatricks managing director Shaun Lowry said the popularity of units was both because of an increased supply through the year and investors looking to move to bricks and mortar.
"Towards the end of last year we've seen quite a few investors come into the marker when interest rates were down," he said.
Mr Lowry said while there was potential for more land on the horizon with developments in the southern suburbs and at Lake Albert in the works, more land would be needed to grow Wagga's population as planned.
"There is quite a bit (of land) out there but as demand continues, council will need to rezone those outlying properties to reduce the lot size ... to satisfy the demand," he said.
The report shows an 8.57 per cent decrease in sales of residential blocks, and 297 building approvals for new houses overall, 14 down on the previous year.
Property valuer Chris Egan said this was due to the lack of blocks available.
"There is a massive demand for vacant residential blocks in Wagga, it's just a lack of supply," he said.
Mr Egan said ideally when people move to Wagga there should be three to four different subdivisions selling land to choose from.
"It doesn't work that way in Wagga, they subdivide the land and then 100 per cent sell," he said.
"There needs to be potentially more thought in where the growth areas of this city want to be, and then open them up prior to the demand forcing the rezoning.
"What we don't want to see is people moving to Wagga and not being able to rent a house and we're seeing that at the moment."
The report shows rental vacancy rates at 1.5 per cent across the Riverina and dropping to a low point of 0.8 per cent in November.
Mr Lowry said Fitzpatricks was now seeing rates as low as 0.3 per cent as people were staying put rather than upgrading their homes or struggling to pay rent.
He said more land and the building of more investment properties was key to providing more options for renters.