Australian homebuyers, particularly those in the capital cities, who think it might be wise to dodge skyrocketing home prices by building their homes from the ground up are in for a disappointment.
Citing the latest Housing Industry Association (HIA)–CoreLogic Residential Land Report, Business Insider noted that land costs across capitals jumped by 2.2% in the last three months to December 2017, marking an 11.1% increase from a year ago. Over that same period, the number of lot sales actually dwindled, falling by 18.8%.
Not surprisingly, Sydney rose to be the most expensive market for vacant residential land, with median lot prices hitting $450,000 during the last quarter of 2017.
Melbourne has the second costliest land with $330,000, followed by Perth and Brisbane with price tags of $269,000 and $232,500, respectively.
Considered as the hottest housing market over the past year, Hobart remained the place to be for the cheapest homes and land. For the same period, its land price remained the most affordable at $165,000.
In terms of median land price growth, Melbourne was the highest, ballooning by 35.9%, almost triple than that of Hobart.
The cost of land per square metre has also jumped across all capital cities, with Melbourne taking the lead with a 26.9% growth. In other cities, price growth ranged from 2.3% to 5.3%.
The report also noted that median lot sizes have also started to shrink. HIA said this underscored the problem land costs are creating when it comes to housing affordability in these cities.
"Affordability conditions in Sydney and Melbourne are at their most challenging since at least the early 1990s, with the price of land being a major cause of the deterioration in affordability conditions," HIA said, as quoted by Business Insider.
The association furthered, "The process required to turn a paddock into a ‘shovel ready’ block of land ready for the construction of a home has a major impact on home prices and ultimately affordability. This process has become increasingly complex and cumbersome and is adding additional costs to the building industry.”