Over the year to September 2021 the median price of land in Australia increased by 12.6%.

The report said the significant increase in the price of land indicates that supply is not keeping pace with demand.

Housing Industry Association (HIA) economist Angela Lillicrap said in Greater Sydney alone the median price of residential land increased by 32.2% over the year to September 2021.

"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," she said.

"This suggests that the shortage of residential land is more severe in the capital cities.

"Land will be the biggest constraint on building activity over the next couple of years.

"The current shortage of land will impact the industry at a time when the broader economy needs construction to help pull it forward."

ABS data released on Wednesday shows new detached home starts in the September quarter experienced a sharp contraction.

HIA2022.PNG

HIA economist Thomas Devitt said availability of land is a major factor influencing the decline. 

"The constraint on home building is not demand but the availability of land, labour and materials," he said.

"The shortage of labour and materials has led to construction timeframes increasing significantly.

"Under normal circumstances, the surge of HomeBuilder projects would have translated into an increase in completions from the June 2021 quarter.

"However, completions have been slower to respond. As a result, the volume of approved-but-not-yet-commenced work is at its highest level in over a decade."

CoreLogic head of research Tim Lawless said fewer land sales through 2021 is "counter-intuitive" to the supply-demand equation.

"Considering the record level of detached house approvals at the peak of HomeBuilder together with the constraints involved with bringing newly subdivided land online quickly, the surge in land prices over the quarter is hardly a surprise," he said.

"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."


Advertisement

Building a home? This table below features construction loans with some of the lowest interest rates on the market.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.43% p.a.
6.68% p.a.
$2,143
Interest-only
Variable
$0
$530
80%
6.14% p.a.
6.20% p.a.
$2,047
Interest-only
Variable
$0
$835
70%
6.19% p.a.
7.59% p.a.
$2,447
Principal & Interest
Fixed
$8
$500
80%
6.44% p.a.
6.79% p.a.
$2,513
Principal & Interest
Variable
$395
$null
95%
6.64% p.a.
7.03% p.a.
$2,213
Interest-only
Variable
$null
$720
90%
6.64% p.a.
7.10% p.a.
$2,213
Interest-only
Variable
$0
$530
80%
6.78% p.a.
6.82% p.a.
$2,260
Interest-only
Variable
$0
$450
80%
7.05% p.a.
6.24% p.a.
$2,675
Principal & Interest
Variable
$0
$1,212
70%
7.24% p.a.
8.01% p.a.
$2,413
Interest-only
Variable
$20
$644
90%
8.39% p.a.
8.72% p.a.
$3,045
Principal & Interest
Variable
$0
$0
75%
8.45% p.a.
7.71% p.a.
$2,817
Interest-only
Variable
$0
$1,212
90%
8.68% p.a.
8.75% p.a.
$3,127
Principal & Interest
Variable
$0
$900
80%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

Image by Federico Respini via Unsplash





Ready, Set, Buy!


Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

By subscribing you agree to our privacy policy