The median price of residential land in Australia jumped by 6.8% over the 2024-25 financial year, which is more than three times faster than consumer price inflation over the same period, according to the Housing Industry Association.
The HIA-Cotality Residential Land Report provides updated information on sales activity in 52 housing markets across Australia, including the six capital cities.
“The ongoing surge in national land prices is the key obstacle to Australia building 1.2 million new homes over five years,” HIA chief economist Tim Reardon said. “In recent years, home buyers have flocked to states like Western Australia, South Australia and Queensland, where abundant and affordable shovel-ready land has been available.”
“These strong population dynamics have driven the strongest improvements in home building activity. Unfortunately, it is also producing some of the fastest increases in lot prices in the nation.”
Reardon said if this continued, the competitive advantage that these states had with lower land prices attracting new residents would be lost relatively quickly.
Brisbane lot prices have overtaken those in Melbourne for the first time in almost a decade, increasing by 9.2% in the last year. Lot prices in Perth have increased by 29.8% in the last year and almost 50% in the last 18 months. Prices in Perth are now only a whisker behind those in Melbourne.
Adelaide still maintains a significant affordability advantage over the larger capitals, but with the price of land per square metre rising by 27.6% in the last year, it has prompted households to opt for smaller blocks of land. Yet the price of a typical Adelaide lot still jumped by 8.1% in 2024-25.
Reardon said these recent developments illustrated the importance of policymakers facilitating healthy pipelines of shovel-ready land across their states.
A failure to provide sufficient residential land and associated infrastructure would limit improvement in home-building volumes. “The return of demand for new housing, especially as borrowing costs have fallen, will be increasingly diverted into the established housing market, driving up prices and worsening the affordability crisis,” Reardon added.
Cotality economist Kaytlin Ezzy said the start of the rate-loosening cycle had been a boon to land sales, with activity improving, albeit from record lows in the June 2025 quarter. “With a further cut in August, and potentially more cuts to come, we’d expect to see a similar lift in volumes in the coming quarters,” Ezzy said.
“However, land affordability and lack of shovel-ready land continue to be major hurdles for the delivery of new housing stock.”
While the annual change in construction cost has ‘normalised’ below pre-COVID levels, the cumulative 32.8% increase seen since the start of the pandemic continues to drag on feasibility: “While up from the lows seen in mid-2023, monthly house approvals in August came in 6.8% below the decade average, while house commencements for the June 2025 quarter remained 8.6% below the decade average.”
“Without improvements in the availability of shovel-ready lots, land supply will likely continue to be a major factor hampering the delivery of new housing stock to market,” Ezzy said.
