Shortages of vacant residential land across Australia have reemerged even as new housing development remains at modest levels, a new report has found.

And land prices are surging across several capital cities.

The Urban Development Institute of Australia (UDIA) has released the 2025 edition of its annual State of the Land Report.

Produced with collaboration with research partners CoreLogic, Research4 and Charter Keck Cramer, the report provides an overview of current conditions and the forward outlook regarding greenfield and multi-residential housing markets.

In terms of greenfield development, the report indicates that the cost and supply of vacant residential land has reemerged as a constraint on new housing delivery.

According to the report, land market activity gathered momentum in 2024 as demand for new housing began to recover.

This followed a lacklustre year in 2023, when home buying activity was impacted by higher interest rates.

Across the year, sales of vacant residential lots increased by 25 percent reach to come in at 38,685.

Meanwhile, developers released 42,700 lots onto the market – a 15 percent increase compared with 2023.

However, activity levels remain modest by historic standards. Compared with decade averages, the volume of land sold in 2024 was down by 22 percent. Meanwhile, land release volumes across the year were 9 percent below long-run averages.

Despite this, the report indicates that supply and pricing pressures have reemerged.

In terms of supply, the volume of stock that was available to be sold for housing development in active trading estates stood at just 1.0 months, 1.4 months and 1.5 months across Southeast Queensland, Perth and Adelaide respectively as of December 31.

This is below the 3-5 months’ worth of trading stock which is considered to be ideal in a balanced market.

Meanwhile, the national median price of vacant residential land across capital city markets increased by 13 percent across calendar 2024 to reach $421,525.

This is twice the long-run average annual price growth rate of 6.5 percent.

Pricing pressures are particularly evident in Perth, Adelaide and Southeast Queensland.

Across these markets, vacant median lot prices increased by 34 percent, 18 percent and 11.5 percent respectively.

Commenting on the outlook, Research4 director Colin Keane said that land shortages are likely to persist in 2025.

“At a national level, the capacity of the Greenfield sector is expected to remain under pressure,” Keane said.

“The replacement rate of ending (land) estates dropped by 22% in 2024, and the average size of the estate was 42% smaller than the long-term average. Supply and capacity continue to be issues across all markets. The market’s ability to deliver affordable family housing in 2025 is closely linked to the number and size of active trading estates.”

In terms of individual markets, Keane expects a recovery in land sales in Melbourne.

Elsewhere, however, he says that developers across Perth, Southeast Queensland and Adelaide have gone as far as they can in bringing new land supply online for now.

As a result, any overall national increase in land sales activity is unlikely.

Despite the tightness in supply, Keane expects pricing pressures to ease in 2025.

This will occur as most land prices are now above fair market value compared with established house prices.

Still, Keane says that challenges remain in delivering land at price points which support affordable housing delivery.

“The main issue facing the national Greenfield market in 2025 will be finding ways to deliver necessary products at prices that align with the customers’ financial capacities,” Keane said.

“This challenge is compounded by managing the costs associated with delivering these products.”

Australia Capital City Land Prices

(source: UDIA, Research4)

Action needed to reach 1.2 million homes

The latest report comes amid growing concern that Australia will fail to deliver the national housing target of 1.2 million new homes over the five years from 1 July 2024 that was established under the National Housing Accord.

In its report, UDIA suggests that the nation will fall approximately 393,000 homes short of this target.

In its national policy platform published in the lead-up to the election, UDIA calls for action across several areas.

These include boosting the supply of development-ready land and providing coordinated infrastructure servicing.

UDIA National President Col Dutton said the importance of action should not be underestimated.

“The recommendations provided in our 2025 report for both State and Federal governments, present a roadmap of what needs to happen to expedite new dwelling supply, improve affordability and allow the industry to drive improved productivity,” Dutton said.

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?

Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector