Land prices jumped more than 12 per cent across Australia last year, marking the biggest annual price rise since 2006.
The median price of land in Australia increased by 12.6% for the year to September 2021, according to the HIA-CoreLogic Residential Land Report.
“The median price of land in the combined greater capital cities increased by 14.7% over the year to September 2021 compared to an increase of 8.6% in the combined regional areas,” said HIA Economist Angela Lillicrap.
“This suggests that the shortage of residential land is more severe in the capital cities.
The economist said the median price of residential land in greater Sydney alone increased by 32.2% over the year to September 2021.
“Land will be the biggest constraint on building activity over the next couple of years,” she said.
“The current shortage of land will impact the industry at a time when the broader economy needs construction to help pull it forward.”
CoreLogic’s Head of Research Tim Lawless said the surge in land prices over the quarter was hardly a surprise considering the record level of detached house approvals at the peak of the HomeBuilder grant, together with the constraints involved with bringing newly subdivided land online quickly.
“What is more counter intuitive is the trend towards fewer land sales through 2021, a pattern that is evident across each of the state capitals despite strong demand,” said Lawless.
“Softer volumes are more a reflection of short supply rather than a lack of demand, which helps to explain the sharp rise in land values at a time when the volume of land sales is reducing.”
The HIA research comes as new building figures from the Australian Bureau of Statistics showed that total housing commencements fell 16.3% in seasonally adjusted terms to 56,617 dwellings in the September 2021 quarter.
The quarterly building figures found that new private sector house commencements declined 16.3% to 35,521 dwellings, while other residential commencements decreased 16.3% to 20,041 dwellings.
Last week, the ABS reported that new housing approvals rose 3.6% in seasonally adjusted terms across Australia during the month of November last year, fuelled by a surge in new units across the country.