An acute shortage of available land has seen the median lot price increase by 22.5% around Australia over the three years to March 2023.  

The new HIA-CoreLogic Residential Land report showed that this compared to a more modest 5.1% rise recorded in the three years before that.  

The shortage of land supply will ensure a significant reduction in the volume of new homes commencing construction next year.  

“The volume of residential land transactions has fallen 37% over the 12 months to March 2023. This will see the volume of new home commencements slow over the next year,” said HIA Senior Economist Tom Devitt.   

“This land shortage continues to drive up prices despite the sharpest increase in interest rates in over 30 years and will weigh on home building activity in the coming years. 

“As the market begins to normalise from the shocks in recent years, it is expected that both sales and prices will return to their historical trend. This depends on the government’s ability to adequately plan its land release pipeline, which in turn depends on the availability of data across all stages of land release.  

“On average, it takes ten years to move land through the seven stages of land release. Decisions made today about land release can be expected to affect housing supply ten years from now. The time it takes to progress from a vacant block of land to a block that is shovel-ready with titles could be a major roadblock to the government’s plan to build a million homes over the next five years.”  

 The decline in the volume of lot sales is consistent across both urban and rural areas.  

Of the 51 regions considered in this Report, 36 saw a decline in sales volumes over the last year.  

Across the country, 37 of the 51 regions considered saw prices grow in the last year.  

All capital cities recorded an increase in median lot prices over the past year, the first time this has happened in nearly 10 years.  

“Although the rate tightening cycle has seen some capitals record mild declines in recent months, land prices overall have remained fairly resilient, thanks to the shortfall in available land supply,” CoreLogic Economist Kaytlin Ezzy said. 

“While sales numbers have eased significantly from the peak volumes seen during the HomeBuilder scheme, it will take some time before we see a more notable recovery in supply levels. Until then, we can expect land prices will remain elevated, dwelling approvals will continue to track below average, and house commencements will continue easing.” 

Sydney continues to be the most expensive of all capital cities, with median land prices of $1,827 per square metre.  

Price growth in Sydney has also vastly outpaced other capital cities.  

For example, the price of a lot in Sydney per square metre is now 94% higher than the average of all capital cities; 10 years ago, it was just 19% higher.