A steep decline in the number of land sales could have a significant impact on housing affordability, new research has found.
According to HIA’s latest residential land report, land sales have fallen 57 per cent in the last 12 months.
Meanwhile, the median value of land in Australia grew 2.8 per cent in the September 2010 quarter to $186,629. Over the year to September 2010, the median value is up 5.2 per cent.
“The results show further increases in land prices and very low sales volumes, both of which bode poorly for housing supply and affordability in Australia,” said HIA senior economist Andrew Harvey.
“Land price appreciation is a key cause of Australia’s housing affordability problem, with higher prices cascading through the residential market to push up the price of both new and existing houses.”
Mr Harvey said Australia’s expensive land prices were due to a failure of policies at all levels of government to achieve a timely supply of land for residential development.
“It’s time that serious and urgent policy action is taken to ensure there is sufficient serviced land for residential building,” Mr Harvey said.
RPdata.com senior research analyst Cameron Kusher said that the escalating cost of land was not only impacting the affordability of new homes but also that of existing housing product.
“When the median price of a block of land in Sydney is $269,000 it’s easy to see why affordability is spiralling out of control. When you add on top of the land cost: professional fees, government charges and the actual cost of constructing a home it’s no surprise that many Australians are forced to remain in the rental market, paying off others mortgages,” said Mr Kusher.