Escalating land prices are emerging as a major threat to Australia’s goal of building 1.2 million new homes within five years, according to the latest findings from the HIA-Cotality Residential Land Report.
“The median price of residential land sold nationally jumped by 6.8 per cent over the 2024/25 financial year, more than three times faster than consumer price inflation over the same period,” stated HIA Chief Economist Tim Reardon.
Covering 52 housing markets across the country, including all six capital cities, the report shows affordability pressures intensifying across both metropolitan and regional markets.
“The ongoing surge in national land prices is the key obstacle to Australia building 1.2 million new homes over five years,” added Mr Reardon.
He said population growth and demand had shifted strongly towards Western Australia, South Australia and Queensland, where “abundant and affordable shovel-ready land has been available.”
However, he warned those advantages were beginning to erode.
“Unfortunately, it is also producing some of the fastest increases in lot prices in the nation,” he said.
“If this continues, the competitive advantage that these states hold with lower land prices attracting new residents, will be lost relatively quickly.”
Mr Reardon noted that “Brisbane lot prices have overtaken those in Melbourne for the first time in almost a decade, increasing by 9.2 per cent in the last year,” while “lot prices in Perth have increased by 29.8 per cent in the last year and almost 50 per cent in the last 18 months.” Perth, he said, is now “only a whisker behind” Melbourne.
“Adelaide still maintains a significant affordability advantage over the larger capitals, but with the price of land per square metre rising 27.6 per cent in the last year, it has pushed households into choosing smaller blocks of land. Yet the price of a typical Adelaide lot still jumped by 8.1 per cent in 2024/25,” he said.
“These recent developments illustrate the importance of policymakers facilitating healthy pipelines of shovel ready land across their states,” he continued.
“A failure to provide sufficient residential land, and associated infrastructure, will limit improvement in home building volumes.”
“The return of demand for new housing, especially as borrowing costs have fallen, will be increasingly diverted into the established housing market, driving up prices and worsening the affordability crisis,” Mr Reardon concluded.
Cotality Economist Kaytlin Ezzy said rate cuts were already influencing buyer activity.
“The start of the rate loosening cycle has been a boon to land sales, with activity improving, albeit from record lows in the June 2025 quarter. With a further cut in August, and potentially more cuts to come, we’d expect to see a similar lift in volumes the coming quarters.”
However, she cautioned that “land affordability and lack of shovel ready land continue to be major hurdles for the delivery of new housing stock.”
“While the annual change in construction cost has normalised below pre-COVID levels, the cumulative 32.8 per cent increase seen since the start of the pandemic continues to drag on feasibility,” Ms Ezzy said.
“While up from the lows seen in mid-2023, monthly house approvals in August came in 6.8 per cent below the decade average while house commencements for the June 2025 quarter remained 8.6 per cent below the decade average.
“Without improvements in the availability of shovel ready lots, land supply will likely continue to be a major factor hampering the delivery of new housing stock to market.”
