Perth's residential land market is the third most expensive in the nation, trailing only the Sunshine Coast and Sydney, according to the latest research by the Housing Industry Association and industry analysts RP Data.
Perth's residential land market is the third most expensive in the nation, trailing only the Sunshine Coast and Sydney, according to the latest research by the Housing Industry Association and industry analysts RP Data.
But in terms of dollar value per square metre, vacant land in Perth is the most expensive in Australia, at $516/sqm, leading the most expensive market traditionally, Sydney, by $38/sqm.
The HIA-RPdata.com Residential Land Report for the September quarter 2010 showed Perth's median lot price at $245,000, well above the nation's median land value of $186,629.
Median land prices in WA grew 11.4 per cent on the previous quarter, and 8.9 per cent on the same quarter in 2009.
Two regional WA markets, south eastern and south western WA, were also among the top ten most expensive, with median lot prices of $166,000 and $165,000 respectively.
Over the year to 2010, median land values were up 5.2 per cent across Australia, while land sales in the September quarter were down 57 per cent on the corresponding quarter in 2009.
Perth was also in the five weakest markets for land sales, with a 69 per cent drop in sales in September quarter 2010 as compared to the same period in 2009.
Sales were also down 58.1 per cent in the six months to September compared with the six months to September 2009.
"It would be reasonable to regard the Perth residential land market as the most problematic of the capital city land markets in Australia," the report said.
"The decline in residential land sales volumes since the stimulus-driven peak has been more extreme in Perth than any other capital city.
"While some slowing would have been expected following a large withdrawal of first homebuyers, the state and local governments must accept responsibility for an unacceptable rate of land release in Perth over recent years."
The report added that the inability to supply new land for residential development remains the key constraint on WA's homebuilding industry.
HIA senior economist Andrew Harvey said the further increases in land prices and low sales volumes boded poorly for consistent housing supply and affordability in Australia.
"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."
Mr Harvey said the rise in land prices were due to failures at all levels of government to achieve a timely supply of residential land.
"It's time that serious and urgent policy action is taken to ensure there is sufficient serviced land for residential building," he said.
RPdata.com senior research analyst Cameron Kusher said the escalating land price was also impacting the affordability of existing homes.
"Typically, vacant land is most abundant in areas further away from the city centre," Mr Kusher said.
"When owners of existing housing stock closer to the city centre see the prices being achieved for housing in these new areas of the city, they quite rightly seek, and in most instances achieve, premiums in excess of these prices.
"Undoubtedly something needs to be done to address affordability constraints and Governments at all levels need to realise that it is a serious problem.
"When an adult working full-time is earning an average of $1,310/week ($68,120 pa) and is looking at a median purchase cost for land in a capital city of between $145,000 (Hobart) and $269,000 (Sydney) there is clearly a disconnect.
"People looking to purchase the land on which to build a house are paying between two and four times their annual wage just to secure the land."
