Housing construction is expected to remain weak for the rest of the year as residential land sales continue to fall.
According to the HIA-RP Data Residential Land Report, residential land sales fell six per cent last quarter.
Meanwhile, the weighted median land value in Australia increased by 0.8 per cent in the March 2011 quarter to $193,980.
Over the year to March 2011, the median land value was up by 4.4 per cent for capital cities and by 3.8 per cent for regional Australia.
“The continuous and substantial decline in land sales volumes since late 2009 is a further indication that new home starts could reach one of their lowest levels seen since the mid 1990’s,” HIA chief economist Harley Dale said.
“Softer demand is part of the story and the dizzy heights sometimes reached in speculation regarding a fictitious housing bubble in Australia certainly doesn’t do anything for home building confidence.
“Nevertheless, the cost of serviceable land is the big barrier. Clearly this cost is excessive in a great number of areas around Australia. Governments need to address this substantial constraint on residential building which is generated by costs they impose.
“It is encouraging that across regional Australia there remain ten local markets with a median residential land value of less than $100,000. These markets can be found across South Australia, Tasmania, Victoria, and New South Wales.”
RP Data’s national research director Tim Lawless agreed and said the current low levels of land transactions are almost certain to result in a continuation, if not worsening in the weak number of dwelling approvals and commencements being reported by the Australian Bureau of Statistics.