Capital city land prices surged six per cent in the last 12 months, another factor in rapidly rising house prices.
The median selling price for capital city land now stands at $247,000, and the cost of land, per square metre, has grown eight-fold since 1990, according to research from RP Data.
A lack of vacant residential land and shrinking lot sizes in capital cities have driven prices higher, RP Data national research director Tim Lawless said.
Land prices have become a key contributor to rising home prices – particularly in capital cities, he said.
The data suggests the cost of materials and labour have changed very little, so it is the rising cost of vacant land that has pushed up housing costs.
“The combination of smaller land lot sizes and rising prices is likely to continue,” he said.
Home prices have risen by more than 16 per cent in Sydney, and almost 11 per cent across all the capital cities combined.
Former treasurer Peter Costello on Wednesday said state government taxes on the release and transfer of land were restricting supply, and contributing to price rises.
The Reserve Bank has also expressed concern about surging house prices, with board members at their most recent meeting noting that the risks associated warranted “ongoing close observation”.
The bank said further speculative demand could amplify the property price cycle and increase the potential for a fall in property prices, which could dent household wealth and spending.