Residential land values continued to rise while land sale volumes have decreased in the December 2010 quarter, according to a new report released by the Housing Industry Association (HIA) and property information provider rpdata.com.
The HIA-rpdata.com Residential Land Report found the volume of land sales fell sharply in the December 2010 quarter, reaching the lowest level in a decade. Sales were down by 40.4 per cent compared to the same quarter in 2009.
At the same time, the weighted median land value in Australia accelerated in the December 2010 quarter, growing by 4.1 per cent to $194,161. Over the year to December 2010, the median value was up 5.9 per cent.
"The escalation in land values highlights an on-going deterioration in new home affordability driven by constraints on supply," said HIA Economist Matthew King.
"The sharp drop in the volume of land sales signals a very weak 2011 for new home building."
Mr King blamed planning and zoning delays, high regulatory costs, deficient land release strategies, high taxation, user pays infrastructure charges and an on-going credit squeeze for escalating land values.
"Policy solutions can be found by all levels of government, but there is currently little evidence of solutions being sought, which is to the detriment of affordable housing for entry level buyers and rental households alike," Mr King said.
Calling land sales a reasonable lead indicator for future supply additions to the market, RPdata.com research director Tim Lawless said the forty per cent reduction in land sales points to ongoing weakness in the housing construction sector.
"While land sales continue to fall the price of land continues to rise. This divergence illustrates the imbalance between supply and demand. A lower number of sales would often suggest demand is drying up, however with land prices continuing to rise the fall away in land transactions is clearly supply related," Mr Lawless said.