Land Costs Rising Faster

Land prices are continuing to rise at about three times the rate of CPI.

In the September quarter land prices grew by 10%, according to the HIA-Cotality Residential Land report.

It says land prices have risen at three times the rate of construction costs in the past 25 years, adding substantially to the cost of building a new home.

Adding to the costs are government fees and taxes, with the extra costs ultimately borne by new home buyers.

In the past 12 months, residential land lot prices in Brisbane and Perth have risen by 18% and 21% respectively, while in Adelaide land lot prices are up by 40%.

HIA Chief Economist Tim Reardon says that as land and building costs continue to rise, alongside new taxes, it is becoming harder for developers to deliver new housing projects.

“The shortage of shovel-ready land is central to solving the affordability challenge,” he says.