Residential land values in Adelaide, Brisbane and Perth have grown rapidly, while prices in Sydney and Melbourne remained relatively stable, according to the latest HIA-CoreLogic Residential Land Report.
HIA Senior Economist Matt King said the median price of a typical residential lot sold in the March quarter 2024 was $343,480, up 3.3 per cent compared to the same period last year.
“Perth, Brisbane, and Adelaide are currently sitting in the fast lane of growth in residential land prices with double-digit annual increases,” Mr King said.
He noted that Hobart grew by 2.4 per cent over the year, Sydney remained flat, while prices fell in Melbourne compared to the previous year.
The report, which provides updated information on sales activity in 51 housing markets across Australia, revealed a two-speed market for residential land.
Land prices in capital cities overall rose 4.4 per cent compared to the previous year, while regional areas saw a 0.9 per cent decline.
Mr King attributed the slowdown in regional land prices to the post-pandemic return of households to capital cities.
Nationally, the number of lots sold in the March quarter 2024 fell by 9.1 per cent compared to the previous quarter.
Mr King said this decline reflected “the dampening effect of sustained high interest rate environment and the inability of policymakers to bring sufficient land for residential development to market in a timely way”.
The report found lot sales remain well below the pre-pandemic average, suggesting an ongoing lack of urgency from state and local governments to release land for residential development.
Mr King criticised the “damaging fixation on taxes and charges levied throughout the new home building supply chain”.
“Excessive taxation and charges on land under residential development is a key reason for the high price of land,” he said.
CoreLogic Economist Kaytlin Ezzy noted that the divergence in capital city land price growth mirrors recent trends in dwelling value growth.
“Affordability continues to be an important factor driving this divergence, with the high interest rate environment skewing demand away from the more expensive end of the market towards more affordable capital city and regional alternatives,” Ms Ezzy said.
She highlighted that rising land prices, driven by persistent undersupply, continues to hamper the delivery of new housing.
“Since the onset of COVID, median land prices across the capitals have increased by between 16.4 per cent (Perth) and 54.2 per cent (Sydney), which has likely priced many potential homeowners out of the new dwelling market,” Ms Ezzy said.
Both economists called for governments to address the supply of land for residential development and review taxes that impact housing affordability.