Australia’s supply of vacant residential land is concerningly low, a new report indicates.

And the recovery in new townhouse and apartment building will take several years to translate into more housing supply.

Published by the Urban Development Institute of Australia (UDIA) in partnership with Researchfour, Cotality and Charter Keck Cramer, the 2026 edition of the annual UDIA State of the Land Report provides a comprehensive assessment of residential development activity and housing market dynamics across Australia.

In terms of greenfield development, the report highlights constraints on the supply of ‘shovel-ready’ land that is serviced and ready to be sold to the market for new housing development.

Around Australia, demand for land has increased over recent years on account of a recovery in new housing development in the detached house segment of the market.

This has taken hold after the number of detached house commencements bottomed out in the September quarter of 2023.

By the end of 2025, land sales volumes across Greater Sydney, SEQ, Peth, Melbourne, Adelaide and the ACT had reached 4,000 lots per calendar month.

Whilst this remains 11 percent below decade averages, it still represents a cyclical high that is comparable to the robust levels of development activity that were seen from 2015 until 2018.

Not surprisingly, this is creating pressure on land supply.

Pressures are particularly acute in Perth, Brisbane and Adelaide – markets which have been the primary focus of the housing recovery.

In an ideal balanced market, the level of supply would equate to between two to four months’ worth of trading stock.

As at December 31, however, markets such as Southeast Queensland and Perth had just 0.5 and 0.6 months’ worth of stock respectively.

Meanwhile, land shortages can also be seen in Sydney (1.3 months) and Adelaide (1.8 months).

Pressures are even starting to emerge in Melbourne, where land sales volumes increased by 50 percent last year despite remaining at historically modest levels.

With 2.2 months of trading stock as at December 31, the city is already at the lower end of a balanced market. Supply is likely to deteriorate further as market conditions improve.

Not surprisingly, this is driving up prices.

At a national level, the median price of vacant residential land rose by six percent on a square meter basis across 2025 to reach $1,184 per sqm.

Price pressures are particularly acute in capital cities, where median lot values have increased by 12 percent across calendar 2025 and by 26 percent over the past two years to reach $472,100.

Pressures are particularly strong in Adelaide, Brisbane and Perth. In these cities, land prices increased last year by 23 percent, 17 percent and 15 percent respectively.

Land shortage

(The stock of available land is just weeks’ worth of sales in some markets. In a balanced market, approx. 2-4 months’ worth of stock would be in inventory. Source: UDIA State of the Land report, 2026.)

Supply constrained going forward

Going forward, Colin Keane, director of Researchfour, said that the shortages are likely to persist throughout 2026.

This will occur on account of ongoing demand as well as challenges in securing new supply.

“A major challenge in the national Greenfield market is finding new projects of adequate scale to replace those that are ending,” Keane said.

“Since 2008, an average of 52 new estates have entered the market each quarter, with each estate averaging 339 lots. In the past year, however, the replacement rate has dropped to 42 estates per quarter, with the average estate size now at 145 lots.

“Limited development capacity is currently affecting regions such as SEQ and Perth. When the market cannot adequately respond to demand, unmet demand accumulates, placing additional pressure on the industry and consequently driving prices upward. These markets are likely to remain under pressure throughout 2026.

“The Melbourne market is slowly coming into play, meaning that total national sales is likely to hit a ceiling of 4,500pcm during 2026. Melbourne’s recovery is not expected to be dramatic but more understated, similar to the 2015-2017 period.

“By mid-2026, the national market should have hit a peak, with sale volumes holding for the balance of the year, pending sufficient capacity.

“In summary, all national Greenfield markets are expected to operate at full or near capacity in 2026, indicating strong results.”

(land sales are back on the rise. Source: as above)

Land shortages hinder national housing target efforts

From a policy viewpoint, the aforementioned land constraints have emerged as an obstacle to achieving Australia’s target of delivering 1.2 million new homes over the five years to June 30, 2029, as established under the National Housing Accord.

To deliver upon this target, the nation would need to complete 60,0000 new dwellings each quarter across the accord period.

As things stand, however, ABS data indicates that the current quarterly level of commencements stands at only 48,778 (September quarter, seasonally adjusted).

With land shortages already evident at this level of building, the nation will need to either unlock more new land or rely upon urban infill to reach the target.

(Land prices are under pressure. Source: as above.)

Apartment supply will take time

Turning to the multi-residential sector, the pipeline has been improving as a recovery in approvals which took hold from the middle of 2024 was reflected in stronger commencement numbers throughout 2025.

Whilst this is encouraging, longer completion timeframes for apartment projects mean that higher approval numbers will not translate into a substantial recovery in new supply additions until at least 2029.

Until this time, UDIA forecasts that new supply additions in multi-residential housing will remain subdued and create a drag on overall supply additions for at least three years.

(An upturn in apartment approvals will take several years to come through to new supply. Image source: own photo)

Action needed

Overall, UDIA forecasts that the volume of new housing production across Australia will contract by 11 percent across 2026.

Over the National Housing Accord period, it forecasts a shortage of 380,000 homes compared with targets.

In a statement, UDIA National President Oscar Standley said that more action is needed to unleash new housing supply.

“Our industry has the capacity to build the homes Australians need,” Stanley said.

“What is required now is decisive action from governments to ensure the right conditions are in place; including increasing development-ready land supply and delivering coordinated infrastructure, so the sector can deliver the affordable homes that Australians urgently need.”

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