House and land supply issues to prompt continued price rises: HIA

The number of vacant land sales has been easing over recent quarters

House and land supply issues to prompt continued price rises: HIA
House and land supply issues to prompt continued price rises: HIA

The strength of demand for house and land offerings is set to continue throughout 2022 and into 2023, according to the HIA chief economist, Tim Reardon.

The latest HIA-CoreLogic Residential Land Report advised the cost of residential land prices rose by 8.5 per cent.

“Land supply has been in tight supply for the past two decades," Reardon said.

“As land is a key component of housing, this increase in price has been a key driver of the rising cost of homes and the decline in housing affordability."

Reardon noted the shortage of building materials had caused delays to home building across the country and added 4 per cent to the cost of homebuilding in 2020/21, according to the ABS.

“There is little state and Australian governments can do to improve global supply chains and improve the availability of building products, but they are in direct control of the volume of land available for home building.

“Ensuring there is an adequate supply of land to meet housing demand is a key responsibility of state and territory governments and one of the necessary steps to addressing the affordability challenge. There is no better time than now to increase the supply of available land and make a generational step toward improving housing affordability,” said Mr Reardon.

The number of vacant land sales has been easing over recent quarters due to a combination of less stimulus along with scarcity of supply, according to Tim Lawless, CoreLogic’s research director.

"The HomeBuilder grant saw demand for vacant land brought forward, with land sales surging through the second half of 2020.

"However, the more recent trend has been a slowdown in land sales but a surge in detached housing construction as the nation moves into the early stages of what is likely to be an extended period of residential detached housing construction.

“The sharp rise in vacant land prices over the year, together with rising construction costs, will place further upwards pressure on the cost of new housing.

"The lift in land prices and residential construction costs along with the value of established housing rising rapidly, is set to add further pressure to housing affordability challenges that are becoming increasingly apparent across the country,” says Mr Lawless.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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