Although land prices have backed off a little this year, it is the main component in determining the price of a new home, Housing Industry Association economist Angela Lillicrap said.
“While land prices have come down during 2019, over the last decade the price of new residential land per square metre in Sydney has doubled and more than doubled in Melbourne,” Ms Lillicrap said.
This is part of the findings in the June 2019 HIA-CoreLogic Residential Land Report.
“A shortage of land is one of the factors that has driven home prices to increase over the past decade,” she said. “The process of making land ‘shovel ready’ can often last a decade; therefore, responding to shortages cannot be met with increased supply in the short term. An adequate supply of land is required to avoid a deterioration in affordability.”
Ms Lillicrap calls on the government to work with the industry to ensure there is an appropriate supply of land to keep the Australian dream of home ownership achievable.
“Improving the monitoring and reporting of the land supply pipeline will enable the government and industry to make well-informed decisions,” she said.
CoreLogic’s Tim Lawless said land values had dropped in the most expensive markets over the past year; however, Hobart and Perth were bucking the trend.
“Hobart land prices have rocketed 20.3 per cent higher over the year end[ed] June, reflecting tight supply against a backdrop of strong demand,” Mr Lawless said.