Exorbitant lot prices are a significant factor against new home sales and construction.
Consider the following charts taken primarily from the 2025 Urban Development Institute of Australia (UDIA) State of the Land Report.
The first chart shows that the median lot price has risen strongly since the beginning of the pandemic across all major housing markets:
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The next chart from CoreLogic additionally reveals the extent to which median lot costs have soared over the previous decade:
Similtaneously median lot costs have surged, UDIA reveals that median lot sizes have shrunk:
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Consequently, the median worth per sq. metre has risen greater than the rise in median lot worth:
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Patrons of heaps are paying way more however receiving much less in return.
The surge in lot costs has dampened demand, with gross sales stagnating regardless of the dire want for extra housing:
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The post-pandemic surge in residential development prices has compounded the hyperinflation of residential lot costs.
As illustrated beneath by Alex Joiner from IFM Traders, residential development prices within the ABS Producer Value Index have risen by 43% because the starting of the pandemic:
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The one optimistic information is that residential development prices fell barely in Q1 2025.
The next chart from Joiner reveals the fee will increase since Q2 2019 throughout the assorted development inputs:
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The basic problem is that the hyperinflation of land and development prices has made constructing housing in Australia prohibitively costly.
In financial phrases, the provision curve for housing has shifted to the left, making it costlier to construct properties at each worth level.
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The Albanese authorities’s 1.2 million housing goal can’t be met below such circumstances.
Land costs and development prices should fall to make new housing developments viable.
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We should additionally curtail inhabitants progress by way of immigration to align housing demand with provide.
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