As the cost of housing continues to surge, land prices throughout the Sydney metropolitan area are now above $1,000 per square meter.

As the cost of housing continues to surge, land prices throughout the Sydney metropolitan area are now above $1,000 per square meter.

Released by Housing Industry Association in conjunction with CoreLogic, the latest Residential Land Report shows that on a square meter basis, the cost of land in metropolitan Sydney surged by $50 in the June quarter and is now sitting at a whopping $1,051 – well above $730 needed in the next most expensive market of Perth or $677 in the nation’s third most expensive land market in Melbourne.

Across the nation, the price of land on the average lot (weighted average) surged by a further 2.4 percent in the quarter to come in at yet another record high of $256,683 – up 8.5 percent year-on-year.

Price pressures are particularly acute in capital cities, where weighted median lot values shot up 2.6 percent during the quarter or 10.1 percent during the year to come in at $298,029.

On a per square meter basis, prices in Sydney have almost doubled over the past ten years whilst those in Melbourne have risen by around two and a half times.

Whilst Sydney has the most expensive market, Melbourne has the fastest growing market from a price perspective.

All up, land prices in Melbourne rose by 7.5 percent during the quarter and 19.6 percent over the year to come in at $275,000.

Prices in Melbourne have risen by around $60,000 in two years.

The increase in prices comes as the volume of land being sold has fallen in the past year by around 9 percent – a potential indication of squeezed supply.

The price rises come as Australia struggles to deliver housing at a price which is affordable to ordinary families.

Housing Industry Association Senior Economist Shane Garrett said the magnitude of land price rises was adding to affordability challenges.

He said land supply was critical for affordable housing delivery, and called upon governments to finance infrastructure and speed up zoning and subdivision processes.

“The speed at which land price is increasing is a concern as it compounds the housing affordability problem,” he said.

CoreLogic Commercial Research Analyst Eliza Owen said opportunities for new residential projects in affordable locations could arise on the back of new and prospective infrastructure developments such as the Badgerys Creek Airport and inland freight rail.

By Prashant Mehra