The median price of land lots rose by 3.3 per cent during the September 2016 quarter, reaching a record high of $243,585, new research has shown.
According to the HIA-CoreLogic Residential Land Report, residential land sales increased for the second consecutive quarter as prices rose by 3.3 per cent, with median prices nudging closer to the quarter million mark.
The quarter marks a new all-time high, taking the title from the June 2016 quarter when the median house price was $237,535.
During the September 2016 quarter, 18,510 land lot transactions were estimated to have occurred across Australia.
Capital city transactions rose by almost 10 per cent over the September quarter, while the combined regional markets increased by just 1.1 per cent.
The report shows that Perth experienced the largest increase in land transactions compared with the same period in 2015 (+5.5 per cent). Turnover also increased in Hobart (+2.1 per cent) over the same period.
The largest reduction in land sales was in Sydney, where sales dropped by a whopping 29.9 per cent over the same period in 2015.
Turnover also fell in Melbourne (-13.5 per cent), Adelaide (-5.1 per cent) and Brisbane (-3.3 per cent).
HIA senior economist Shane Garrett said price pressures in the residential land market were greatest in the capital cities, especially in Sydney, where prices were “approaching $1,000 per square metre”.
Overall, land lot sales were 6.4 per cent higher (1,121 more lots) than the previous quarter, but 7.3 per cent lower than a year earlier. Despite this, the cost of land reached new heights.
According to CoreLogic research director Tim Lawless, median land prices have risen consistently since mid-2013.
“It is clear that one of the primary drivers of broader housing market growth has been the underlying appreciation of land values, which is pushing the overall value of housing higher,” Mr Lawless said.
“The median dollar value per square metre of vacant land was recorded at $927 in Sydney, which is 32 per cent higher than the next most expensive capital city, which is Perth where the rate per square metre is $701.
“The high land costs are a significant contributor to the unaffordability of housing across Australia’s largest capital city.”
Mr Lawless said it was obvious that demand for vacant land “is most concentrated across the capital city markets where economic conditions are generally stronger”.
Call for government action
Both Mr Lawless and Mr Garrett called for more government action to make housing more affordable.
“With housing affordability one of the most topical housing market issues, the underlying drivers of high land costs need further scrutiny. Government policies around land release and headworks costs are central to the debate around housing affordability and the cost of vacant land,” Mr Lawless said.
Mr Garrett added, “The number and size of government taxes, fees, levies and charges on new residential land needed to accommodate our growing population continues to weigh down on our national housing affordability challenges.
“In addition to removing the excessive taxes on new land, long-term commitment from all levels of government in the areas of planning, land release and infrastructure funding is necessary.”