Sales of vacant residential land across Australia have plummeted to 25-year lows whilst prices have hit record highs as land shortages threaten to undermine the nation’s housing recovery.

Published by the Housing Industry Association (HIA) and real-estate information services provider Cotality, the HIA-Cotality Residential Land Report provides a quarterly update on land sales activity across 52 housing markets throughout Australia.

According to the report, the number of vacant residential lots that were sold during the March quarter dropped by 12.4 percent to just 8,250.

This represents the lowest level of sales for 25 years.

Meanwhile, the median price of vacant residential lots increased by 1.5 percent during the quarter and by 8.6 percent over the year to March to reach record highs of $372,620.

The combination of low volumes and rising prices typically indicates a shortage of available stock.

The most significant shortages are in capital cities.

All up, the number of lots sold across the nation’s capitals fell to just 4,890 sales.

This represents the lowest volume on record since 1991.

At the same time, median lot prices in capital cities increased by 2.2 percent over the quarter and by 10.4 percent over the year to March.

Leading the price increases are Perth, Hobart, Brisbane and Adelaide.

Over the past year, prices in these capitals have risen by 38.5 percent, 28.3 percent, 9.3 percent and 8.8 percent respectively.

Markets in these capitals are particularly tight as these cities have led the national recovery in detached home building.

In regional markets, sales numbers remained comparable to low activity levels seen over recent years at just 3,360 sales, whilst prices rose by a more modest annual rate of 3.2 percent.

To be sure, part of the increase in prices is due to greater lot sizes.

All up, the national median lot size increased by 2.7 percent over the quarter and by 6.3 percent over the year to March to reach 484 square meters.

Even stripping this out, however, the square meter price of land in capital city markets has risen by 5.5 percent over the past year.

(source: HIA-Cortality Residential Land Report March 2025)

The latest report comes as Australia has seen a recovery in detached home building markets since interest rates began to stabilise in mid-2023. (Recovery in the multi-unit sector did not begin until the middle of last year.)

Over the two years from June 2023 to June 2025, the seasonally adjusted monthly number of detached homes that were approved for construction around the nation increased by almost 12 percent from 8,172 to 9,142.

The latest data further underscores concerns that the cost and availability of ‘shovel ready’ land is likely to emerge as a constraint on both the recovery in detached house building and the nation’s ability to address housing supply and affordability challenges.

To meet the National Housing Target of delivering 1.2 million new homes over the five years from 1 July 2024, the nation needs to deliver an average of 20,000 homes per month.

As things stand, the current land shortage has emerged at a time when approvals are running at only 17,000 per month.

This means that unless the land supply situation improves, the nation will need to rely upon multi-residential construction (units, townhouses, apartments etc.) in order to achieve the targets.

HIA senior economist Tom Devitt expressed concern at the latest result.

He called on governments to unlock more land supply.

“There were just 8,250 residential lots sold nationally in the March Quarter 2025, the weakest quarter of sales for Australia in 25 years,” Devitt said.

“The dramatic decline in lot sales across Australia coincided with the median price of residential land reaching a new high of $372,620 in the first quarter of the year, putting prices 39.2 per cent above their equivalent value in 2019.

“From already weak levels, this deterioration in sales volumes, coinciding with record high lot prices, points to a worsening shortage of shovel ready land across the country …

“Market confidence has been strengthening on the back of strong population growth, tight labour markets and recovering household incomes. Now with two interest rate cuts in the back pocket, and the expectation of more to come, this should bring even more people back to the market.

“Without a healthy pipeline of shovel ready land across Australia’s capitals and regions – with all the associated infrastructure – this return of demand for new housing will be diverted into the established housing market, driving up prices and worsening the affordability crisis.

Cotality Economist Kaytlin Ezzy said that land shortage will place further pressure on new housing supply and house prices.

“With further rate cuts expected to stoke housing demand, the ongoing shortage of shovel ready land, coupled with ever increasing construction costs and low approvals levels, will continue to constrain the delivery of new housing, sending both land and established dwelling prices higher,” Ezzy said.

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