Australians are paying record-high prices for residential land, new research shows.
The national median price of a residential block of land in Australia reached $340,000 in the September Quarter 2023, a new record high and up by more than a quarter compared with before the pandemic.
The latest HIA-CoreLogic Residential Land Report provides updated information on sales activity in 51 housing markets across Australia, including the six state capital cities.
HIA Senior Economist Tom Devitt observed that shortages of shovel-ready land saw lot prices surge during the pandemic, while the volume of lots being sold plummeted to twenty-year lows.
“This ties in with other data showing the number of homes commencing construction is also lower than at any point in the last decade”, Devitt said, adding that alleviating the housing shortages in Australia will require a supply-driven approach, and National Cabinet’s ambition to build 1.2 million well-located homes in five years is a step in the right direction.
“It would further require the release of more shovel-ready residential land into the market, which the data suggests has fallen to levels inconsistent with required levels of home building.
“Delivering the infrastructure needed to get more residential land remains a chokepoint, with developer contribution charges acting as a tax on new housing, compounding other taxes and regulatory constraints on home building.”
According to CoreLogic Economist Kaytlin Ezzy, the continued increases in land prices indicate just how constrained the supply of shovel-ready land is.
“The government’s plan to provide 1.2 million new homes within five years is already an ambitious goal and would exceed the current record for 5-year completions, recorded over the five years to December 2019 (1.045m), by almost 15%”, Ezzy said.
“While the growth trend in construction costs appears to be normalising, helping to provide assurance for builders and potential new home buyers, without a sufficient and consistent release of shovel-ready land, it will be an increasingly difficult goal to achieve”, she concluded.
