Residential land prices across Australia’s smaller state capitals are rising rapidly as the housing crisis continues to take effect.
Land values in Perth, Brisbane, and Adelaide are seeing price spikes in some areas, with a double-digit average annual increase across all three state capitals.
The data comes from the Housing Industry Association (HIA) and CoreLogic’s combined Residential Land Report, which shows that the average residential lot nationwide sold for $343,480 during the March 2024 quarter—a 3.3 per cent annual increase.
Meanwhile, the growth rate across all capital cities is 4.4 per cent higher than last year.
The recently released data follows the trend of rapidly rising dwelling prices across the same three capitals, all of which have seen an annual change of at least 15 per cent for houses and 10 per cent for units.
However, the price movement didn’t match up in the nation’s two larger cities, with land value growth remaining virtually static in Sydney while growth fell in Melbourne compared to the same period 12 months ago.
HIA senior economist Matt King says the data reflects a dual-tier rate of price growth in land values across the country.
“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,” he explained.
“Perth, Brisbane, and Adelaide are currently sitting in the fast lane of growth in residential land prices with double-digit annual increases.”
Lot price growth on the rise but sales fall
However, while the price of land increased throughout the March 2024 quarter, the number of lots sold declined 9.1 per cent compared to the December quarter.
Property data from January to March shows a fall in land sales across all national capitals and regional markets as buyers battle high interest rates and a lack of new land supply.
Mr King says the slower sales rate highlights a need for reforms to help boost land availability and reduce the unnecessary cost add-ons accompanying lot sales.
“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,” he said.
“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.”
“Excessive taxation and charges on land under residential development is a key reason for the high price of land.”“Land supply has been inadequate for the best part of a decade, and inefficient and inequitable taxes, such as stamp duty, have only compounded the problem and significantly inflated the cost of land.”
