According to the latest HIA-Cotality Residential Land Report, the median price of residential land sold increased by 2.6 per cent nationally in the final quarter of 2024, reaching an unprecedented $369,530.
HIA Senior Economist Tom Devitt said that lot prices have rapidly accelerated, finishing 2024 at 8 per cent higher than a year earlier, compared to more modest increases in previous years.
“The fact that these record low sales volumes occurred at the same time that land prices re-accelerated from record highs, is indicative of shortages of shovel ready land, driven by the rising cost of providing infrastructure and delays in the planning system,” Mr Devitt said.
The report revealed that 2024 represented the weakest calendar year of residential lot sales since 2000, with just 42,590 lots sold, down by 5.7 per cent from the previous year’s 45,150.
This persistent imbalance between supply and demand suggests that dwelling price pressures will continue, especially as housing demand increases nationwide due to population growth, low unemployment, and recovering real incomes.
Recent interest rate cuts are expected to bring more aspiring homeowners into the market, further intensifying demand for limited land supply.
The re-elected Albanese Government has indicated plans to invest in “enabling infrastructure” to help bring more residential land to market, addressing one of the key barriers to increased housing supply.
Mr Devitt said that it was important to have that level of investment but cautioned against limiting infrastructure funding to specific buyer groups or housing types.
“Fast-tracking this infrastructure is fantastic value-for-money for the government but care must be taken not to limit the funding of this infrastructure to only specific buyer groups or housing types,” he said.
Cotality Economist Kaytlin Ezzy highlighted how the shortage of affordable land is redirecting buyer interest to established properties instead of new builds.
“The lack of affordable shovel-ready land continues to be a significant barrier preventing the delivery of new housing stock to the market, with many prospective buyers instead shifting demand to the established market,” Ms Ezzy said.
Despite some improvements in construction conditions, with the RBA reporting a decline in new dwelling purchase inflation in recent quarters, land availability and affordability remain significant obstacles to addressing housing supply challenges.
The HIA recently released a paper examining the paradox of trying to improve housing affordability by placing heavier cost burdens on new home building, suggesting that well-intentioned policies can sometimes have counterproductive outcomes.
“Conditions on infrastructure funding, like a form of inclusionary zoning, can be well-intentioned but ultimately counterproductive,” Mr Devitt said.
