South West land in most expensive list

The median land price in Perth has risen 4.8 per cent in the June quarter as the land price in the South West was among the 10 most expensive areas in the country, a new report shows.

The latest Housing Industry Association and RP Data residential land report today showed the median residential land value in the metropolitan area was $227,500, up 4.8 per cent on the previous quarter's $217,000.

However, the median price was 4.4 per cent lower on the same quarter in 2008.

The number of land sales in Perth in the June quarter was 2,027 which the report said was 44.9 per cent higher than in the same quarter in 2008.

"The recent strong gains in the volume of land sales for Perth suggest that 2010 will be a period of solid growth in new home starts following three years of trend decline," the report said.

Outside of Perth, the South West region was the most expensive residential land market in the state, recording a median land value of $155,000, as land sales surged 40 per cent in the first half of calendar 2009 as compared to same time last year.

On a price per square metre basis, the South West region was the fifth most expensive residential land market in the country at $256 per square metre.

In the Gold Coast and Sunshine Coast, land was priced at $359/sqm, in Richmond-Tweed in New South Wales land is at $298/sqm while in Northern Queensland land was priced at $256/sqm.

Nationally, the weighted median price of land increased by 1.1 per cent in the June quarter to $174,490.

Sydney remained the most expensive market with a median price of $255,000 while the most affordable market was Mallee in Victoria with a median price tag of $70,000.

HIA chief economist Harley Dale said median land prices rose for the second consecutive quarter, after declining throughout 2008.

"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.

"There is no chance of a new home building recovery gathering the momentum required in coming years if adequate and affordable land supply is not available.

"There are already concerns that this problem may develop again through 2010 and this remains the critical issue for policy makers to address."

However, in an encouraging sign, the volume of land sales for Australia is now trending higher, supporting HIA's forecast for a moderate recovery in new home building in 2010.

"Land sales were up by 1.3 per cent 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," Mr Dale said.