This article was originally published by Nicole Lindsay via smh.com.au on Oct 24, 2017.
The median price for an Australian housing lot increased 8.5 per cent to $256,683 in the June quarter, an all-time high for vacant residential land, according to the HIA-CoreLogic Residential Land Report.
The price of residential land in Sydney has reached a record high of $1051 a square metre, setting a new benchmark for land values.
While Sydney median prices increased 9.8 per cent over the past 12 months, prices in Melbourne surged 19.6 per cent.
Melbourne land now costs $677 a square metre while Perth land commands $730 a square metre.
In the past 10 years, Sydney prices have increased 83 per cent but Melbourne land soared 159 per cent in the same 10-year period, according to the report.
HIA senior economist Shane Garrett said “the speed at which land price is increasing is a concern as it compounds the housing affordability problem”.
CoreLogic’s commercial research analyst Eliza Owen said “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 developments under construction”.
The report shows the volume of sales slowed in the past year, but turnover is picking up. The number of sales increased 13.1 per cent to 17,830 in the June quarter – but that figure remains 8.7 per lower than a year ago.
Nearly two-thirds of residential land transactions take place in capital cities, but regional areas account for 37.7 per cent.
The report found Melbourne is the most active market recording 21 per cent of all sales in the June quarter, with Sydney’s more expensive environment yielding 10 per cent of the total deals.
Danni Addison, Victorian chief of the Urban Development Institute of Australia said prices will continue to rise “unless there’s a big boost on the supply side of the equation”.
“Demand isn’t dying down, so we will continue to see increasing prices across the market unless there’s a big boost on the supply side of the equation,” Ms Addison said.
“There’s a critical issue with housing production timeframes, which desperately need to be streamlined so industry can bring more housing to market at a pace that can meet demand,” she said.
The least expensive land markets are found in South Australia and Tasmania. Hobart also boasts the largest average lots, at 669 square metres and land costs just $196 a square metre – an increase of 28 per cent since 2007.
Sydney, despite being the most expensive land market in Australia, also offers the second largest average lot sizes at 470 square metres, trailed by Brisbane at 448 square metres.
Land in Brisbane costs $563 a square metre, trailing slightly behind Adelaide which recorded land values of $602 a square metre.