The HIA-CoreLogic Residential Land Report – co-developed by the Housing Industry Association (HIA) and CoreLogic – has been released, providing updates on sales activity across Australia’s housing markets.
HIA Senior Economist, Matt King, said that Adelaide, Brisbane and Perth are seeing residential land values grow at a rapid rate, while Sydney and Melbourne’s values remain relatively stable.
“The median price of the typical residential lot sold in the March quarter 2024 was $343,480, which is 3.3 per cent higher compared to the same period in the previous year,” Mr King said.
“Perth, Brisbane and Adelaide are currently sitting in the fast lane of growth in residential land prices with double-digit annual increases. Hobart grew by 2.4 per cent over the year, Sydney remained flat while prices in fact fell in Melbourne compared to the previous year.
“There are evidently two speeds of price growth in residential land market values, with the smaller more affordable capital cities seeing sharper increases in prices.”
Mr King said that land prices in the capital cities overall are 4.4 per cent higher compared to the previous year.
“The regions on the other hand recorded a 0.9 per cent decline over the same period.
“Land prices in the regions have slowed with the post-pandemic return of households to the capital cities offsetting the relative affordability advantage of many regional markets.
“Nationally, the number of lots sold in the March quarter 2024 fell by 9.1 per cent compared to the previous quarter, reflecting the dampening effect of sustained high interest rate environment and the inability of policymakers to bring sufficient land for residential development to market in a timely way.”
Mr King said that the decline in the number of lots sold in this quarter has been broad-based, as land sales fell across all capital cities and regional markets.
“Lot sales remain well below the pre-pandemic average, suggesting an ongoing lack of urgency from state and local governments to bring enough land to market for residential development.
“Furthermore, it reflects a damaging fixation on taxes and charges levied throughout the new home building supply chain.
“Excessive taxation and charges on land under residential development is a key reason for the high price of land.”
Mr King said that land supply has been inadequate for the best part of a decade, and that inefficient and inequitable taxes, such as stamp duty, have only compounded the problem and significantly inflated the cost of land.
“Before a brick is laid, the median lot prices across many capital city and regional markets are already simply too expensive, pricing vast numbers of owner-occupiers out of the new home building market.
“It is incumbent upon governments to adequately supply land for residential development, both Greenfield and infill, to support Australia’s underlying housing demand.
“An appropriate demand/supply balance should be complimented by the removal of punitive taxes, such as stamp duty, that are pushing new homes out of the reach of many Australian families.”
CoreLogic Economist, Kaytlin Ezzy, said that the recent divergence in capital city land price growth mirrors the recent trends in dwelling value growth, with mid-sized capitals like Perth, Brisbane and Adelaide far outstripping Sydney and Melbourne.
“Affordability continues to be an important factor driving this divergence, with the high interest rate environment skewing demand away from the more expensive end of the market towards more affordable capital city and regional alternatives,” Ms Ezzy said.
Ms Ezzy also noted that rising land prices, driven by a persistent undersupply, continues to be an important factor hampering the delivery of new housing.
“Since the onset of COVID, median land prices across the capitals have increased by between 16.4 per cent (Perth) and 54.2 per cent (Sydney), which has likely priced many potential homeowners out of the new dwelling market.
“Additionally, while growth in construction costs has stabilised in recent months, they remain well above the pre-COVID average, further pushing new dwelling ownership out of reach of many households.”
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