Australia’s affordability crisis has shown no signs of improving, with new data showing residential land values continue to soar.
According to the Housing Industry Association/ RP Data Residential Land Report, the volume of land sales plummeted last quarter, while the weighted average land value grew 4.1 per cent.
Sales were down by 40.4 per cent compared to the same quarter in 2009.
"The escalation in land values highlights an ongoing deterioration in new home affordability driven by constraints on supply,” HIA economist Matthew King said.
“The sharp drop in the volume of land sales signals a very weak 2011 for new home building.
“Quite apart from the considerable damage wrought by the interest rate hikes of last November, new housing continues to sag under the weight of the excessive cost of serviceable land.
“Put together planning and zoning delays, high regulatory costs, deficient land release strategies, disproportionately high taxation, user pays infrastructure charges, and an ongoing credit squeeze, and you have a recipe for crippling land values.
“Policy solutions can be found by all levels of government, but there is currently little evidence of solutions being sought, which is to the detriment of affordable housing for entry level buyers and rental households alike.”
RP Data’s research director Tim Lawless agreed that the low number of land transactions paint a worrying picture for future housing supply.
“Land sales are a reasonable lead indicator for future supply additions to the market and a forty percent reduction in land sales points to ongoing weakness in the housing construction sector which is already very soft,” he said.