Land prices have hit record highs across the country as severe shortages continue to hamper the government’s ambitious housing targets.
According to the latest HIA-CoreLogic Residential Land Report, the median price of a residential lot in Australia reached $351,044 in the June Quarter 2024, rising 2.2 per cent in the quarter to be 6 per cent higher than the previous year.
The new record comes as lot sales hit one of their lowest levels this century, with just 10,788 residential lots sold in the quarter.
HIA Senior Economist Tom Devitt said the rise in land prices is adding to supply pressures.
“A rise in the price of land, while the volume of sales is suppressed, indicates that the shortage of shovel ready land is deteriorating further,” Mr Devitt said.
“This weakness of sales alongside record high prices is present across capitals and regional areas.
In Sydney, lot sales were less than half their decade average, while Melbourne recorded only one-third of its typical volume.
Melbourne’s struggles have been compounded by additional taxes, including a windfall gains tax and land tax surcharge, which have added to costs and restricted supply Mr Devitt said.
Brisbane, Adelaide, and Perth all reached record highs for greenfield lots in the first half of the year, with Brisbane prices approaching Melbourne levels.
“These record prices are being reached alongside – at best – unremarkable volumes of lot sales,” Mr Devitt said.
Mr Devitt said there is a clear need to ensure a solid pipeline of shovel-ready land, especially as confidence returns to these markets.
“Policymakers must work to reduce constraints and costs on new home building,” he said.
“This includes measures as set out in the HIA Planning Blueprint consisting of accelerating planning processes and approval times to facilitate increased infill development as well as speeding up the release of greenfield land and increased funding for critical enabling infrastructure to make projects shovel-ready faster.
“Meeting government housing targets and improving housing affordability requires a significant boost to home building. Increasing land costs and uncertainties on industry and households will have the opposite effect.”
CoreLogic Economist Kaytlin Ezzy said the situation is affecting housing supply.
“Over the year to June, approximately 176,000 homes were completed nationally,” Ms Ezzy said.
“While up by 1.2 per cent year-on-year, this was 8.4 per cent below the decade average and 26.6 per cent below the 240,000 a year needed to meet the Government’s five-year housing target.
“Without a steady flow of shovel-ready land, it’s likely land prices will continue to trend upwards, and dwelling approvals and completions will continue to fall short of target.”
