Land sales volumes have hit a decade-long low, making affordability a challenge as prices continue to rise.

The latest Housing Industry Association-RP Data Residential Land Report shows that the volume of land sales fell in the September 2010 quarter to a level 57% lower than during the same period in 2009. 

At the same time, the median value of land in Australia grew 2.8% to $186,629, or 5.2% during the year to September 2010.

“The results show further increases in land prices and very low sales volumes, both of which bode poorly for housing supply and affordability in Australia,” HIA senior economist Andrew Harvey said in a statement.

“Land price appreciation is a key cause of Australia’s housing affordability problem, with higher prices cascading through the residential market to push up the price of both new and existing houses,” he said.