Land price rises are adding tens of thousands of dollars every year to the cost of new housing, new data suggests.

Released by the Housing Industry Association in conjunction with CoreLogic, the Residential Land Report indicates that the median price of vacant residential land throughout Australia increased by 3.3 per cent – or $6,050 – during the September quarter to go from 2337,535 in the June quarter to $243,585 in the September quarter.

Median lot prices have now risen by about seven per cent, or about $18,000, since the September quarter of 2016, whilst land price increases have taken an extra $40,000 out of the hip pockets of residential consumers compared to the situation three years ago.

Perhaps surprisingly, Adelaide has led the charge over the past 12 months, with land prices up 12.4 per cent year-on-year.

Sydney and Melbourne had increases of 10.1 per cent and 10 per cent respectively whilst prices rose by 4.9 per cent in Brisbane and 0.8 per cent in Perth.

Sydney has the highest cost of land, with the average price of land, setting residential consumers back by $927 per square metre – up from $529 per square metre 10 years ago.

Over the past 12 months alone, land price increases in Sydney have added almost $40,000 to new housing costs in that city.

CoreLogic research analyst Tim Lawless said ongoing pressure on land prices was impacting ability of the development industry to deliver new housing at affordable prices.

Pointing out that median lot sizes were in fact contracting, Lawless said consumers were in fact shelling out more for less land.

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“I think it has a profound effect. The cost of land is virtually directly passed on to consumers, so with land prices consistently rising, obviously that’s contributing to the overall costs of constructing a dwelling and selling it to the end market,” he said.

Lawless said the primary driver of pricing pressure was record demand for new housing driven by population growth.

As well, he said the rate of land release in areas which are well serviced from an infrastructure perspective was not where it needed to be.

He said the pressures were particularly evident in Sydney and Melbourne, both of which are experiencing significant population growth and in both of which governments are experiencing challenges in terms of delivering new infrastructure.

residential land price australia