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Residential land values have continued to rise whiles sales volumes sink, according to the latest Housing Industry Association/ RP Data Residential Land Report.
In the final quarter of 2010 the volume of land sales was down more than 40 per cent compared to 2009 while the weighted average land value grew 4.1 per cent.
“The escalation in land values highlights an on-going 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.”
Mr King said new housing was sagging under the weight of the excessive servicing costs as well as damage wrought by last year’s interest rate hikes.
“Put together planning and zoning delays, high regulatory costs, deficient land release strategies, disproportionately high taxation, user pays infrastructure charges, and an on-going 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 painted a worrying picture for future housing supply.
“Land sales are a reasonable lead indicator for future supply additions to the market and a forty per cent reduction in land sales points to ongoing weakness in the housing construction sector which is already very soft,” he said.