According to the HIA-CoreLogic Residential Land Report for the June 2016 quarter, residential land prices in Australia have climbed to yet another all-time high, bolstered by strong demand and lower interest rates.
This ongoing surge in residential land prices is having a negative impact on housing affordability. “Housing affordability has deteriorated across several key markets, and the ongoing rise in land prices is proving very challenging,” noted Shane Garrett, senior economist at the Housing Industry Association (HIA).
“With market supply having fallen further over the past year, policy makers need to look very carefully at ways of bringing about more sustainable outcomes in residential land supply. This will inevitably involve tackling issues around the pace of land release, the bottlenecks in the planning process and the excessive burden of taxation,” Garrett concluded.
Published by HIA and CoreLogic, the Residential Land Report offers a comprehensive review of quarterly sales activity and price trends in 41 regional and six capital city markets in Australia.
The report notes that the median residential land price rose by 2.6% during the June 2016 quarter, reaching a new all-time high of $237,535. Furthermore, an estimated 18,395 residential lots were estimated to have been transacted during the June quarter, down by about 9.3% on a year ago.
According to Tim Lawless, research director of CoreLogic, the increase in land transactions nationally was accompanied by a surge in land sales in Tasmania and in some regional markets.
“Hobart saw land sales jump by almost 27 per cent over the first half of 2016 compared with the same period a year ago, while the largest cities, where affordability constraints are already the most visible, recorded a substantial reduction in land sales over the first six months of 2016,” said Lawless.
In Sydney, the volume of land sales was down sharply, while land prices surged 14.1% over the year. With demand outweighing supply, significant price inflation is becoming apparent across vacant land markets.
In the June quarter, land transactions experienced the largest increase in Hobart (+26.9%) compared with the same period a year earlier. Land sales saw the largest reduction in Sydney (-38.3%), followed by Melbourne (-14.3%), and Brisbane (-3.9%).
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