An economist has warned that the property market is “fast running into supply problems” after land values reached record levels.
The median price of residential land reached a record $213,000 per lot in the September 2014 quarter, according to a report by the Housing Industry Association and CoreLogic RP Data.
That was the result of year-on-year growth of 10.0 per cent in capital city land prices and 3.5 per cent in regional land prices.
Shane Garrett, senior economist at the Housing Industry Association, said the number of land transactions fell during the quarter, even as price growth accelerated.
“These are the classic hallmarks of a market which is fast running into supply problems,” he said.
“It appears that shovel-ready residential land is starting to dry up against the backdrop of record-new home building activity.”
CoreLogic RP Data research director Tim Lawless said he was concerned by the increase in land prices, particularly given that dwelling approvals and construction are at record levels.
“Given that land sales have been trending lower since the June 2013 quarter, it does not bode well for this period of heightened construction to come to fruition,” he said.
“Ideally we should be seeing more land bought to the market and sold during this period of low borrowing costs. This would help to curtail the increases in the cost of this vacant land.”