“Residential land prices have started to soften in some markets over the past year,” commented HIA Senior Economist Shane Garrett.  
 
The July 2018 edition of the HIA-CoreLogic Residential Land Report provides updated information on lot prices and sales activity in 47 markets across Australia – including six of the capital cities.  
 
“In Sydney, residential land prices peaked at $479,000 per lot in the September 2017 quarter. Today’s results indicate that the typical lot price in Australia’s largest market has fallen to $467,500 during the March 2018 quarter,” explained Shane Garrett. 
 
“Brisbane land prices have also eased over the past year. 
 
“In contrast, Melbourne’s market for residential land remains very strong with the typical lot price in Victoria’s capital reaching a new high of $359,000 during the March 2018 quarter. 
 
“As the single largest ingredient of every new home, land prices have major implications for affordability. It is important that governments work towards delivering the land we need to house Australia’s growing population over the long term. Home ownership will become even harder to grasp if sufficient volumes of residential land are not delivered year on year in a manner that the market can keep track of,” concluded Shane Garrett. 
 
According to Eliza Owen, CoreLogic’s Commercial Research Analyst, “While high frequency CoreLogic indices data is showing the capital city housing markets moving into a downswing, the residential land sales data show a continued trend of subdued transaction numbers against price increases. In the year to March 2018, the value of residential land across Australia increased 11.8%, against a 28.4% decline in the number of sales.  
 
“This suggests that a scarcity of available land may be limiting transaction activity.  
 
The extraordinary increase in the land price per square metre in Melbourne, at 29.3% over the year, occurred against a 5.3% annual increase in the CoreLogic Hedonic Index for the Melbourne dwelling market.  
 
“Looking at higher frequency movements, the index suggests a 0.5% decline in the Melbourne dwelling market over the March quarter, and a further 1.4% decline in the three months to June. This may indicate that while the price of land across Melbourne has seen very high increases between September 2016 and March 2018, pressure on demand may start to ease, and be reflected in land prices.  
 
“CoreLogic is finding fewer new development applications for residential projects added to the pipeline across Australia. The number of new residential development applications observed in the March quarter was 1,412, (6%) lower than the previous quarter. Lower levels of development activity are likely to be another consequence of softened housing market demand,” concluded Ms Owen.