Vacant land lot prices surge to 7.6 per cent to record highs: HIA-CoreLogic report

Median vacant land prices have soared in the September quarter putting further pressure on the federal government’s ambition for 1.2 million homes to be built over the next five years.

The median price of land sold nationally increased by 7.6 per cent in the September quarter report to $366,510.

The median price of land across Australia has reached record highs with a lack of available greenfield and infill lots putting the dream of a new home out of reach for many Australians, according to a new report.

The HIA-CoreLogic Residential Land Report found the median price of land sold nationally increased by 7.6 per cent in the September quarter report to $366,510 for a lot compared to the same period in 2023 and 4.5 per cent higher than the previous quarter.

HIA Economist Maurice Tapang said the land price rise was out pacing the increase in the cost of other goods and services in the economy.

“Land prices have risen three times faster than the rate of growth in the ABS Consumer Price Index (CPI) and five times faster than growth in the cost of home building materials as measured by the Producer Price Index for the September quarter 2024,” he said.

“Prices have increased the fastest in areas where either home building activity is beginning to pick up or where the cost of providing the infrastructure for new lots is high.”

Mr Tapang said the ongoing inadequate supply of land for residential development, both greenfield and infill, continued to be a key constraint on housing supply and risks “torpedoing” the Government’s ambition to build 1.2 million homes over the next five years.

“Increased urgency and commitment from governments to release more land for residential development and adequately service it with essential infrastructure will alleviate rising land prices and help more Australians into home ownership,” he said.

According to Australian Bureau of Statistics the government was already more than 15,000 homes behind just three months into its 2029 national housing target.

To meet the National Housing Accord’s 2029 target, 60,000 new homes are needed every quarter. In the September quarter – the first three months since the Housing Accord kicked off on 1 July 2024 – only 44,884 homes were built across Australia.

The median price of land sold nationally increased by 7.6 per cent in the September quarter report to $366,510.

The HIA-CoreLogic Residential Land Report provides updated information on sales activity in 52 housing markets across Australia, including the six state capital cities.

Australia’s capital cities’ median land lot price increased by 9.2 per cent compared to the previous year to $408,160 and was up 6.8 per cent compared to the last quarter.

Brisbane and Perth recorded the strongest growth in their median land prices, up in the last 12 months by 21.2 per cent and 38.6 per cent, respectively compared to the September quarter in 2023.

The other capital cities trailed behind, with Adelaide recording a 9.2 per cent growth in its median lot price compared to the previous year, followed by Sydney (7.2 per cent higher) and Hobart (1.3 per cent up) while Melbourne was the only capital city to record an annual decline, down by 4.2 per cent.

The median lot size sold nationally in the September quarter 2024 was 472 sqm, up by

4.1 per cent compared to the previous quarter but relatively unchanged compared to the same

time in the previous year. Compared to a decade ago, the median lot size has fallen by 5.8 per

cent.

There were 9364 land sales recorded in the September quarter 2024, down by 20.3 per cent

compared to the previous quarter and down by 18.4 per cent compared to the same time in the

previous year.

Mr Tapang said the cost of delivering shovel-ready land to market remained high although there was still demand.

“There are signs that despite the rise in land prices, particularly in the capital cities, buyers are looking at better opportunities to purchase land, whether through exploring growing regional locations or buying smaller lots,” he said.

Median land price rises in the regions slowed to 2 per cent in the September quarter.

The report found Australia’s regions continued to provide better land purchasing opportunities compared to the capital cities, with the median price growing in the year by a slower 2 per cent to $281,910 in the 12 months but was 1.6 per cent over the quarter.

However, in areas such as the Illawarra in NSW and Geelong in Victoria, where the median land price is lower than their respective capital cities, lot sales have increased by over 50 per cent compared to the previous year.

CoreLogic economist Kaytlin Ezzy said affordability continues to be a major hurdle in bringing on new housing stock.

“The continued uptick in land prices, coupled with upward pressure on construction costs and the higher for longer interest rate environment, has moved new home ownership further out of reach for some Australians,” she said.

“Over the year to November, the ABS counted about 169,000 new dwelling approvals.

“While up slightly (0.5 per cent) compared to the previous year, this is 17.8 per cent below the decade average and almost 30 per cent below the 240,000 a year needed to meet the government’s target.

“With the HomeBuilder backlog largely worked through, some builders are coming up against a shortfall in new work.

“The ABS noted in November monthly CPI release a 0.6 per cent monthly decline in the new dwelling purchase prices, with some builders offering discounts and promotions in order to secure hesitant business, despite ongoing margin pressures.”.

Originally published as Vacant land lot prices surge to 7.6 per cent to record highs: HIA-CoreLogic report