A critical shortage of land for residential development around Australia's major cities is contributing heavily to a housing affordability crisis, according to a report from Housing Industry Association (HIA) and Australian Property Monitors.
The Land Monitor report shows that the average vacant lot price in the five major cities stood at $183,873 in December, which is 7.7% higher than the same time in 2005.
Ron Silberberg, HIA managing director, said: "The Land Monitor shows that Australia's stock of developed residential land has shrunk to record low levels, driving up prices and eroding housing affordability."
The report shows that the most significant increases in vacant lot price were recorded in regional Northern Territory, up 30% in the three months to December 2006, while Sydney saw growth of 11.7% in a flat market.
The median price of a vacant residential lot in Sydney stands at $357,500, Melbourne $155,000 and in Brisbane $175,000. In Adelaide the median figure is $186,800 while Perth prices are sky high at $389,750, showing a change of 122% during the year to December last year. In Darwin, the price had also shot up to reach $349,000 for an average block.
The dramatic rise means that the proportional cost of land in a house and land package has increased. The Land Monitor shows the national average at 48%, while in Perth land makes up 63% of the average dwelling price. In Sydney, the figure has risen to 57% and 53% in Adelaide.
Michael McNamara, operations manager at Australian Property Monitors, said: "This report provides clear evidence that, until the supply of reasonably priced land improves, housing affordability will continue to deteriorate."
He added that poor housing affordability has distorted real estate markets and reduced the wealth creation opportunities for young families.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now