Vacant land grew in value and price across most capital cities over the past year, with Sydney and Melbourne price increases rising in excess of those for home values, new research has found.
According to CoreLogic RP Data's latest Property Pulse, as at June 2016, the median vacant land sales price was $212,000 — with those in combined capital cities coming in at $270,350 and those in combined regional areas down to $164,250.
Notably, the report shows that regional area sales prices fell by 1.9 per cent while combined capital city selling prices increased by 8.1 per cent over the year.
As such, the combined capital city vacant land selling price is now 65 per cent higher than median prices in regional areas, the largest differential since September 2003.
Further, on a rate per square metre basis, capital city vacant land is now 231 per cent more expensive than land outside of the capital cities, thought to be the largest differential on record.
Sydney remains to have the highest median price for land, with June 2016 figures coming in at $422,000 — a 12.5 per cent increase on the previous 12 months.
CoreLogic’s head of research, Cameron Kusher, said that while it is “no surprise that the cost of vacant land in Sydney is significantly higher than in all other capital cities, of note is just how strong the increases in land prices have been in Sydney and Melbourne over the past year, with rises in excess of those for home values”.
For example, over the same period (June 2016) Sydney house values were 11 per cent up and Melbourne were up 12.1 per cent year-on-year.
Mr Kusher said a “significant driver” for the cost increases has been the price to purchase land.
“It’s no wonder median house prices in Sydney are hovering around $900,000 when new vacant land (most of which is on the outskirts of the city) has a median price in excess of $422,000.
“An increase in the amount of land available for development, as well as lower fees and charges applied to land development, and more competition amongst developers would likely reduce land costs. Potentially, this would slow the escalation in housing costs, particularly in Sydney and Melbourne.”
Mr Kusher also noted that on a rate per square metre, housing costs have increased across each capital city over the past year. Again Sydney and Melbourne recorded the greatest increases over the period. Excluding Hobart, each city currently shows a median lot size below 500 square metres.
"Interestingly, median lot sizes have increased over the past year in a number of capital cities including Sydney and Melbourne where median land prices have increased significantly.”