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The median price of residential land has reached a record high and threatens to further challenge the federal government’s ambitious housing goals.
The latest HIA-CoreLogic Residential Land Report has revealed the median price of a residential lot in Australia has hit $351,044 in the June quarter of 2024, an increase of 2.2 per cent on the previous quarter and 6 per cent higher than the same period in 2023.
According to HIA senior economist Tom Devitt, this is a record high in the price of residential land and was driven by “acute shortages and rising tax imposts”.
“This new all-time high was achieved alongside the sale of just 10,788 residential lots in the quarter, one of the weakest quarters of sales of the 21st century,” Devitt said.
Devitt said that the rise in the price of land simultaneous with the volume of sales being suppressed is an indication that the shortage of shovel-ready land is deteriorating even further.
“This weakness of sales alongside record high prices is present across capitals and regional areas,” Devitt said.
“In Sydney, the volume of lot sales in the year to June was less than half its decade average. In Melbourne, they were about one-third of its decade average. In both of Australia’s largest capitals, the lack of new supply is sustaining lot prices around record highs.
“Melbourne in particular has struggled more than other capitals to see an improvement in lot sales, with buyer confidence likely impaired by additional taxes imposed on land and housing supply, further adding to costs and restricting supply.”
Additionally, prices in Brisbane, Adelaide and Perth for greenfield lots of land also hit record highs during the first half of the year alongside “unremarkable volumes of lot sales”, according to Devitt.
“This points to the need to ensure a solid pipeline of shovel-ready land, especially as confidence returns to these markets,” Devitt said.
“Policymakers must work to reduce constraints and costs on new home building.
“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.”
Adding to this, CoreLogic economist Kaytlin Ezzy said this record high amid below-average sales continue to point towards “an ongoing undersupply of land hampering the addition of new housing stock”.
“Over the year to June, approximately 176,000 homes were completed nationally. 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,” she said.
“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.”
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