“The cost of land is one of the main components in determining the price of a new home,” said HIA Economist Angela Lillicrap.
The June 2019 edition of the HIA-CoreLogic Residential Land Report provides updated information on sales activity in 46 markets across Australia, including the six state capital cities.
“While land prices have come down during 2019, over the last decade the price of new residential land per square metre in Sydney has doubled and more than doubled in Melbourne,” added Ms Lillicrap.
“A shortage of land is one of the factors that has driven home prices to increase over the past decade. The process of making land ‘shovel ready’ can often last a decade, therefore, responding to shortages cannot be met with increased supply in the short term. An adequate supply of land is required to avoid a deterioration in affordability.
“If the Australian dream of home ownership is to remain achievable, governments must work with industry to ensure that there is an appropriate supply of land. Improving the monitoring and reporting of the land supply pipeline will enable government and industry to make well informed decisions,” concluded Ms Lillicrap.
CoreLogic’s head of research, Tim Lawless, highlighted that land values had slumped across the most expensive markets over the past year.
“The rate per square metre of vacant land in Sydney was down 12.6% over the 12 months ending June 2019 and Melbourne land prices were down 7.6%. Prices were also down in Adelaide (-12.0%) and Brisbane (-4.6%). Lower land prices should provide further support for housing affordability in these markets, however in Hobart and Perth land prices were higher.
“Hobart land prices have rocketed 20.3% higher over the year ending June (2019) reflecting tight supply against a backdrop of strong demand. Despite the significant rise, Hobart is still showing the lowest median land price amongst the capital cities at $180,000 and the largest median land area at 624sqm.”