Sales of vacant residential land have plummeted to their lowest level in 24 years  across Australia even as the price of land is back on the rise, new data shows.

And concerns are growing that the costs and availability of ‘shovel ready’ land is emerging as a constraint upon the nation’s ability to address housing supply and affordability concerns.

Released last week, the HIA-Cotality Residential Land Report published by Housing Industry Association (HIA) and Cotality (formerly CoreLogic) has provided updated information on land sales activity and prices in 52 housing markets across Australia including the six state capital cities.

Overall, the report indicates that the volume of land sales activity has plummeted even as prices continue to rise.

Across calendar 2024, the number of vacant residential lots that were sold throughout Australia fell by 5.7 percent to reach just 42,560 land transactions.

This represents the weakest level of transaction activity that has been recorded in any calendar year since the year 2000.

Meanwhile, national median lot prices increased by 2.6 percent in the December quarter to reach $369,530. This represents a gain of 8 percent across the whole of calendar 2024.

At this level, the rate of land price growth has accelerated considerably when compared with the more modest annual increases of 4.4 percent and 3.3 percent which occurred in 2022 and 2023 respectively.

To be sure, part of the increase in prices can be explained by an increased in the size of lots being sold.

Overall, median lot sizes rose by 4.4 percent over the twelve month to December to reach a national average of 483 sqm in the December quarter. This represents the largest average size on record since the September quarter of 2015.

Even stripping this out, however, the price of land per square meter rose by 1.4 percent during the December quarter and by 6.9 percent over the year to reach record highs of $885 per sqm.

Largely speaking, the rise in prices is being concentrated in capital city markets, where median prices increased by 9.9 percent across calendar 2024.

Price growth in regional centres came in at a more modest 2.1 percent over the year.

More specifically, land price growth is being concentrated in cities where the recovery in detached house construction is already underway.

Across Perth, Hobart, Brisbane and Adelaide, the price of vacant residential lots has risen by 40.4 per cent, 18.1 percent and14.0 percent and 12.1 percent over the year to December to reach $358,000, $381,000 and $285,000 respectively.

This is not surprising as Perth in particular as well as Adelaide and Brisbane has seen a recovery in new home building activity.

By contrast, annual price growth in Sydney (2.2 percent) and Melbourne (1.74 percent) has been more modest as home building market conditions in these capitals remains weak.

The latest data further underscores concern that a shortage of land that is ready to be sold onto the market for new housing development could jeopardise Australia’s availability to unlock new affordable housing supply in the detached house segment of the market.

Whilst data is typically subject to quarterly fluctuations, the combination of low transition volumes and rising prices typically indicates a significant shortage of supply.

With such shortages appearing to be apparent at a time when new home activity in detached home construction remains relatively low, there are concerns that the supply and affordability of vacant land will emerge as a constraint on the anticipated strong recovery in new detached home building.

Should this occur, efforts to deliver the national housing target of 1.2 million new homes over the five years to 30 June 2029 will become increasingly reliant upon multi-residential development (units, townhouses, apartments etc.).

In their report, HIA and CoreLogic say that more needs to be done unblock the supply of new land.

Toward this end, the reports acknowledges that governments are making efforts in this area.

As part of its pre-election campaign pitch, for example, the Albanese Government unveiled a $10 billion program to identify and unlock unused government-owned land for new housing development and to work with states and territories to fast-track land releases, upzoning and planning approvals.

Through these measures, the Government homes to unlock up to 100,000 homes – all of which will be offered exclusively to first-homebuyers.

Whilst welcoming the additional investment, HIA cautions that restricting eligibility to new home buyers only is a mistake.

Limiting potential purchasers to a single cohort, HIA argues, could undermine the economic feasibility of some of the developments which are being subsidised through the program. This could ultimately impact sales of the new land which is subsidised and could delay the delivery of new land to the market.

HIA Senior Economist Tom Devitt said that the latest results are concerning.

“The fact that these record low sales volumes occurred at the same time that land prices re-accelerated from record highs, is indicative of shortages of shovel ready land, driven by the rising cost of providing infrastructure and delays in the planning system,” Devitt said.

“This suggests that dwelling price pressures will also persist, especially as demand for housing increases across the country.

“Elevated population growth, low unemployment rates and recovering real incomes have been bringing more aspiring homeowners back to the market in a number of states, and recent interest rate cuts will get more of them over the line.

“This increased demand will require a strong pipeline of shovel ready land to mitigate the pressures on affordability going forward.

Cotality Economist Kaytlin Ezzy agrees that land supply and affordability are an increasing concern.

“The lack of affordable shovel-ready land continues to be a significant barrier preventing the delivery of new housing stock to the market, with many prospective buyers instead shifting demand to the established market,” she says.

“The RBA reported a decline in new dwelling purchase inflation in both the December 2024 (-0.2 ppt) and March 2025 (-0.4 ppt) quarters, despite a continued, albeit more moderate, rise in construction costs, with builders and developers increasingly offering promotions and incentives to entice new business.”

“This suggests that some of the previous hurdlers in delivering new detached housing, including material and labour shortages, have abated, while land availability and affordability remain a significant blocker.”

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