The cost and supply of vacant residential land continues to be a barrier for new housing delivery across Australia, new data suggests.

And Brisbane has overtaken Melbourne as the nation’s most expensive land market.

The Housing Industry Association and Cotality have released the June quarter edition of their Residential Land Report.

The report provides updated information on sales activity in 52 housing markets across Australia including the six state capitals.

At first glance, the report appears to suggest that land shortages may be easing.

In the June quarter, the number of vacant lots that were sold edged up by 19.2 percent from a very low base in the March quarter.

Meanwhile, the median price of vacant residential lots remained unchanged at $372,950.

This, however, presents a misleadingly benign picture of the nation’s land market.

Strip out the effect of a contraction in lot sizes and national median lot prices in fact rose by 2.0 percent on a square meter basis in the June quarter to reach record highs of $928 per sqm.

Over the year to June, meanwhile, national median lot prices increased by 6.8 percent overall and by 7.2 percent on a square meter basis.

This is happening as sales volumes remain at near 25-year lows despite having increased from the March quarter.

The combination of low volumes and rising prices most likely indicates a shortage of ‘shovel ready’ land which is zoned for residential development and is ready to be sold to the market for new housing construction.

Primarily speaking, shortages are concentrated in capital cities.

Across metropolitan areas within the six state capitals, land prices increased by 7.9 percent on a weighted average basis in 2024/25.

Meanwhile, prices in regional areas rose by a more modest 3.7 percent.

Housing recovery drives land demand

The latest data comes as the market for detached home building is on a recovery trend.

Since bottoming out in the September quarter of 2023, the seasonally adjusted number of commencements in detached home building have increased during five of the past seven quarters.

Not surprisingly, this is driving a recovery in demand for residential land.

(Commencements in multi-residential construction (units, townhouses, apartments etc.) also trended higher across the first half of calendar 2025. However, activity in this segment of the market has less impact compared with detached housing on the market for new residential land.)

Perth, Hobart, Brisbane and Adelaide lead the way

With capital city markets, price increases are concentrated in Perth, Hobart, Brisbane and Adelaide.

Across 2024/25, prices in these capitals increased by 29.8 percent, 20.8 percent, 9.2 percent and 8.1 percent respectively.

This happened as median lot values in Sydney and Melbourne contracted by 1.5 percent and 1.9 percent during the quarter to record more modest annual gains across 2024/25 of 2.8 percent and 2.0 percent respectively.

The concentration of pricing pressures across Perth, Brisbane, Adelaide and Hobart is unsurprising as the recovery in detached home building has been concentrated in these cities.

Indeed, the above numbers understate the full extent of pricing pressures across these areas.

In Perth, for instance, median lot prices have increased by almost 50 percent over the past eighteen months.

Meanwhile in Adelaide, the full extent of the price increase is being obscured as rising land prices push households into choosing smaller blocks of land.

Strip out the effect of this and Adelaide land prices in fact rose by 27.6 percent in FY25 on a square meter basis.

Meanwhile, in Hobart, a 4.1 percent jump in prices across the June quarter (and a year-on-year increase of 20.8 percent) may indicate that a new price cycle is emerging in the Tasmanian capital with the return of housing demand.

Furthermore, the report also suggests that regional areas are beginning to feel the pinch from land shortages.

Whilst the 3.7 percent annual increase in median lot prices that was recorded across 2024/25 in regional areas was much lower than the rate of increase recorded in capital cities, it came after prices in regional areas had previously been relatively flat over the past three years.

The latest quarterly increase also represented the first time that regional areas have seen price increases in three consecutive quarters since 2022.

All this, the report suggests, may indicate the return of demand to regional areas as well as capital city markets.

Land shortage an obstacle to national housing targets

The latest report further underscores the degree to which land constraints are likely to serve as a barrier to meeting Australia’s national housing target of delivering 1.2 million new homes over the five years from 1 July 2024 as established under the National Housing Accord.

To meet this target, Australia needs to build 240,000 new homes each year or 60,000 new homes each quarter (net of demolitions).

As things stand, however, the nation commenced only 45,156 new homes (seasonally adjusted) in the June quarter. This represents barely three quarters of the quarterly number of homes which are needed.

This means that the Australia is experiencing land shortages and price rises even as the nation is not building anywhere near enough homes to meet its target.

Unless land constraints are addressed, this suggests that the nation will need to rely upon infill development in established suburbs if targets are to be achieved.

Furthermore, the report highlights long-term land pricing challenges.

Over the decade to June, the square meter price of land has more than doubled across the metropolitan areas of Sydney, Melbourne, Brisbane and Hobart.

Over that same period, square meter prices have risen by 52 percent in Perth and by 62 percent in Adelaide.

Sydney still the most expensive market

Across metropolitan areas, Sydney remains the nation’s most expensive land market with a median lot price of $689,350.

Meanwhile, Brisbane ($400,000) has overtaken Melbourne ($382,000) with Perth ($375,000) not far behind.

Hobart ($320,000) and Adelaide ($292,000) remain less expensive compared with the other state capitals.

More action needed

HIA Chief Economist Tim Reardon says that more action is needed to unblock new land supply.

He points out that in 2024/25, land prices rose three times faster than consumer price inflation.

“The ongoing surge in national land prices is the key obstacle to Australia building 1.2 million new homes over five years …” Reardon said.

“… These recent developments (price increases particularly in Brisbane, Adelaide and Perth) illustrate the importance of policymakers facilitating healthy pipelines of shovel ready land across their states.

“A failure to provide sufficient residential land, and associated infrastructure, will limit improvement in home building volumes.

“(If that happens,) The return of demand for new housing, especially as borrowing costs have fallen, will be increasingly diverted into the established housing market, driving up prices and worsening the affordability crisis.”

CoreLogic Economist Kaytlin Ezzy said that the latest results are concerning.

Ezzy says that land sales volumes are likely to continue to improve over coming quarters in light of further cuts to interest rates in August and potentially more interest rate reductions to come.

But she warns that the cost and availability of land – along with higher construction costs – will continue to act as a barrier to project feasibility and new housing delivery.

She points out that this is happening even as new housing commencements in the June quarter remained below decade averages to the tune of 8.6 percent (as well as being well below national housing targets as mentioned above).

“Land affordability and lack of shovel ready land continue to be major hurdles for the delivery of new housing stock …,” Ezzy said.

“… Without improvements in the availability of shovel ready lots, land supply will likely continue to be a major factor hampering the delivery of new housing stock to market.”

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