Residential land prices have soared to new highs across capital cities, compounding Australia’s housing affordability problem.
The median lot price increased 8.5 per cent to $256,683 in the 12 months to June, according to the latest Housing Industry Association-CoreLogic Residential Land Report.
It was the fifth-straight quarterly increase and takes the price to an all-time high.
At $1051/sqm, residential land in Sydney easily remains the most expensive in Australia while Perth comes in second at $730/sqm followed by Melbourne at $677/sqm.
“The continued land price pressures identified in this report do not augur well for housing affordability over the near future,” the report said.
The Sunshine Coast is Australia’s most expensive regional land market at $632/sqm followed by the Gold Coast at $531/sqm.
Australia’s cheapest land markets are concentrated in South Australia and Tasmania
“The speed at which land price is increasing is a concern as it compounds the housing affordability problem,” HIA senior economist Shane Garrett said.
He said real progress on affordability would require improved financing of housing infrastructure, monitoring and timely reporting on land release, and speeding up the zoning and sub-division process.
Residential land prices rose the most in Melbourne, up 19.6 per cent over the year.
Price growth remained strong at 9.8 per cent in Sydney, while Adelaide saw an 8 per cent increase and Perth had a 5 per cent gain.
Brisbane prices were nearly flat, up just 0.1 per cent over the 12 months, while Hobart was the only capital city to experience a reduction in median land price, recording a 15.8 per cent decline.
Of the six capital cities covered in the report there was a 16.1 per cent rise in land sales across those markets during the June quarter, 8 per cent lower than a year earlier.
“Record high lot prices over the past five quarters are likely to have contributed to worsening affordability and influenced the unprecedented level of high-density residential development that is currently under construction,” CoreLogic commercial research analyst Eliza Owen said.
Home sales across the capital cities have continued to rise in recent weeks, but the auction market has softened, with the clearance rate drifting below 70 per cent.
New and prospective infrastructure developments such as the east coast’s inland freight rail and a second Sydney airport may open up employment opportunities outside of the metropolitan regions, which may stimulate housing demand in more affordable areas, Ms Owen said.
Source: The West Australian