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.”

( Source : Real Estate Business Liam Garman 29 October 2024 )