A shortage of land for building new homes is contributing to the housing crisis, new research shows.
The latest Residential Land Report, released this week by Corelogic and the Housing Industry Association (HIA), has revealed that residential land transactions fell 37% over the 12 months to March 2023.
HIA Senior Economist Tom Devitt predicts this will see the volume of new home commencements slow over the next year.
“An acute shortage of available land saw the price increase by 23% over the three years from March 2020 to March 2023”, Devitt said, comparing that to a 5% increase in the previous three years.
Devitt expects nevertheless, that as the market begins to normalise from the shocks in recent years, both sales and prices will return to their historical trend.
“This depends on the government’s ability to adequately plan its land release pipeline, which in turn depends on the availability of data across all stages of land release”, he said.
“On average, it takes ten years to move land through the seven stages of land release, so decisions made today about land release can be expected to affect housing supply ten years from now.
“The time it takes to progress from a vacant block of land to a block that is shovel-ready with titles could be a major roadblock to the government’s plan to build a million homes over the next five years”, Devitt concluded.
CoreLogic Economist Kaytlin Ezzy noted that land prices overall have remained fairly resilient, thanks to the shortfall in available land supply.
“While sales numbers have eased significantly from the peak volumes seen during the HomeBuilder scheme, it will take some time before we see a more notable recovery in supply levels”, Ezzy said.
“Until then, we can expect land prices will remain elevated, dwelling approvals will continue to track below average, and house commencements will continue easing”, she concluded.
