By Robert Carry

The average national land price has increased for the second consecutive quarter after suffering declines throughout 2008, a new report has found.

The figures, revealed in the latest residential land joint report from Housing Institute of Australia (HIA) and property information firm, showed the weighted median price of raw land in Australia increased by 1.1% in the June 2009 quarter to $174,490.

Sydney proved the most expensive market with a median price of $255,000, while the most affordable was Mallee in Victoria with a median price of $70,000. HIA Chief Economist Dr Harley Dale warned that the increases could begin to spiral, causing another affordability crisis.

"The challenge now is to ensure that land price appreciation does not get out of control the way it so clearly did in the last up-cycle, eroding housing affordability to a disproportionate extent along the way," he said.

Dale continued, "Land sales were up by 1.3% in the June 2009 quarter compared to the same period last year. While a modest outcome, it was nevertheless the first positive result since the end of 2007."

According to Tim Lawless, national research director, the affect of land supply constraints are likely to be compounded by ongoing increases in demand for housing. "In raw numbers, population growth is at record levels and Australia's population hasn't increased this fast since the baby boom.

"The latest population projections released by the treasury suggest the rate of population growth in Australia is not likely to let up any time soon. This fact alone should spark policy makers to act sooner rather than later with regards to instigating a more proactive and strategic land release program."