Australian land prices have reached new record highs as the cost and availability of vacant residential land remains a barrier to achieving national housing targets.

But the property sector has praised Federal Government investments in ‘enabling infrastructure’ to support new housing delivery.

The Housing Industry Association and Cotality have published the latest edition of their HIA-Cotality Residential Land Report.

The report provides updated information of sales across 52 housing markets including the six state capitals.

According to the report, the national median price of vacant residential land increased by 1.5 percent during the December quarter to reach a new record high of $397,840.

Across calendar 2025, median prices increased by 9.4 percent – almost three times the rate of general inflation.

To be sure, part of the upsurge reflects an increase in the size of blocks being sold.

Across the nation, median lot sizes increased by 1.5 percent during the December quarter and by 4.5 percent across 2025.

Even stripping this effect out, however, median lot prices per square meter ($979 per sqm) increased by 0.9 percent during the quarter and by 8.4 percent across the year.

Not surprisingly, pressures are concentrated around capital cities.

Across the six state capitals, the weighted median lot price increased by 2.2 percent during the December quarter and by 12.5 percent across calendar 2025 to reach $448,750.

By contrast, average prices across regional markets ($209,960) edged down by 0.9 percent during the December quarter and rose by just 0.4 percent over 2025.

Within capital cities, pressures are concentrated in Perth, Adelaide and Brisbane.

This is not surprising given the extraordinary levels of new housing development which have occurred in these cities over recent years.

Across 2025, median lot prices in these markets rose by 27.5 percent, 25.7 percent and 17.7 percent respectively.

Elsewhere, prices rose by 10.8 percent in Hobart, 6.9 percent in Melbourne (mostly due to greater lot sizes) and 1.4 percent in Sydney.

According to the report, the rise in prices came as the number of sales remains healthy but still relatively modest by recent historic standards (see chart).

The combination of rapidly increasing prices on relatively modest volumes is a likely indicator of a shortage of residential land which is serviced and ready to be sold for new residential development.

This is particularly the case in Brisbane and Adelaide, where strong price increases came off the back of modest transaction volumes across 2025.

Longer term, the report highlights ongoing pressures in these markets.

For example:

• Perth (land) prices have almost doubled in just three years.
• Brisbane prices have nearly doubled in little more than four years.
• Adelaide prices are up by two-thirds in less than four years.

The latest report highlights ongoing challenges in meeting the national housing target of delivering 1.2 million new home completions over the five years to June 2029 under the National Housing Accord.

To meet this target, Australia needs to build 240,000 homes per year or 60,000 homes per quarter.

As things stand, however, land shortages are evident even as the number of homes being constructed remains below target (in the December quarter, ABS data indicates that 53,567 homes were commenced around the country).

Should these shortages remain, the nation will need to rely heavily upon multi-residential development (units, townhouses, apartments etc.) to reach the target.

(Land sales and prices in Australia. Land prices have hit record highs even as sales volumes remain modest by historic standards. This is a likely indicator of a shortage of ‘shovel-ready’ land which is ready to be sold to the market for new housing development. Source: HIA-Cotality Residential Land Report.)

Praise for infrastructure funding

To help speed up new housing delivery, the Federal Government announced a $2 billon Local Infrastructure Fund in the 2026/27 Commonwealth Budget.

The fund will provide grants to local governments and state utilities to build ‘enabling infrastructure’ such as local roads, water/wastewater services, electricity connections and local public transport connections (such as bus stops).

According to the Government, the new fund will help to unlock up to 65,000 new homes.

Commenting on the report, HIA Senior Economist Tom Devitt said that the ongoing increases in land costs are concerning.

He said that the importance of the new infrastructure fund should not be underestimated.

“Residential land prices increased by 1.5 per cent in the final quarter of 2025 to be 9.4 per cent higher over the year, increasing almost three times faster than consumer prices over the same period,” Devitt said.

“The median price of residential land sold nationally reached a new record high in the December quarter 2025, at $397,840.

“Perth, Brisbane and Adelaide have been producing new record high prices for a number of years on the back of their leading of the national home building recovery. Sydney, Melbourne and Hobart have just recently produced their own record highs.

“There are also signs in a number of these markets that land shortages are limiting the number of lots being sold and threatening to constrain home building recoveries all over again.

“A lack of shovel-ready land and associated infrastructure has been by far the number one constraint on home building over the last few decades, even with more recent material price shocks and acute labour shortages.

“There are tens of thousands of homes that could commence construction around the country if the essential transport and utilities infrastructure was in place.

“The problem is that local and state governments face financial constraints that often impede the timely delivery of such infrastructure and subsequent housing.

“The recent Australian Government Budget makes progress on a number of these fronts, including $2 billion worth of ‘enabling infrastructure’.

“The reacceleration of lot prices in recent quarters highlights the importance of addressing the constraints to the delivery of more shovel-ready land and infrastructure.”

Cotality research director Tim Lawless noted higher land prices are coming at a time when prices for established homes are losing steam (primarily on account of higher interest rates).

Over the long term, he says that such a situation may further exacerbate housing supply and affordability challenges. This could occur as higher land costs and more subdued selling prices make the viability of new residential development projects more difficult.

This is the case even as softer market conditions are welcome news for home buyers in the immediate term (albeit with higher interest rates.)

“We have seen Sydney and Melbourne home values gradually falling since December last year, while the smaller capitals are clearly losing steam as higher interest rates and affordability pressures bite,” Lawless said.

“While we may see some affordability improvements as established markets navigate softer conditions, an ongoing scarcity of new housing remains an offsetting factor. It’s hard to see a material improvement in the affordability of Australian housing until we see a broad-based and sustained supply response underway.”

“The Australian Government’s commitment is a positive medium-term step in the right direction.”

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