The cost of vacant land has continued to increase in capital cities over the past year providing the impetus for growth in the cost of established housing stock.
The median price of vacant land sales nationally as at June 2016 was recorded at $212,000.
The median price has actually decreased by -2.3% over the past 12 months.
Although nationally median prices are lower there has been a divergence between price growth across the capital city and regional markets.
Median sales price of vacant land, combined capital cities vs combined regional areas
As at June 2016, the median vacant land sales price was recorded at $270,350 across the combined capital cities and $164,250 for the combined regional areas.
Over the past year, combined capital city selling prices have increased by 8.1% while combined regional area sales prices have fallen by -1.9%.
The median selling price for combined capital city vacant land is now 65% higher than median prices in regional areas, the largest differential since September 2003.
The median size of residential land sales as at June 2016 was recorded at 450sqm within the combined capital cities compared to 812sqm across the combined regional areas.
The median land size has held reasonably steady (+0.4%) over the year across the capital cities and is 11.5% higher across the combined regional areas.
The chart shows that capital city vacant land sizes may have reached a low point having remained at around current levels for some time.
Meanwhile, regional market land sizes have increased a little over the past year and are substantially larger than those within the capital cities.
Median vacant land size (sqm), combined capital cities vs combined regional areas
Based on the selling prices of vacant land and the size of the lots, the rate per square metre of vacant land as at June 2016 was recorded at $584 across the combined capital cities and $177 across the combined regional areas.
The rate per square metre for vacant last sold has increased by 4.3% over the year across the combined capital cities and has fallen by -17.0% across the combined regional areas.
On a rate per square metre basis, capital city vacant land is now 231% more expensive than land outside of the capital cities which is the largest differential on record.
Median vacant land rate/sqm, combined capital cities vs combined regional areas
The key statistics table details the key vacant land statistics across each of the state capital city markets.
Key statistics across state capital city markets, to June 2016
The cost of vacant land in Sydney is significantly higher than in all other capital cities.
It is also noticeable how strong the increases in land prices have been in Sydney and Melbourne over the past year, with rises in excess of the rise in home values.
Each city except Hobart currently shows a median lot size below 500sqm.
Interestingly, median lot sizes have increased over the past year in a number of capital cities including Sydney and Melbourne where median land prices have increased significantly.
On a rate per square metre basis, housing costs have increased across each capital city over the past year.
Again Sydney and Melbourne have recorded the greatest increases over the period.
The cost of housing in the combined capital cities has increased over the past year and this data shows that a significant driver of the increase has been the cost to purchase land.
It is no wonder median house prices in Sydney are hovering around $900,000 when new vacant land (most of which is on the outskirts of the city) has a median price in excess of $422,000.
An increase in the amount of developable land, as well as lower fees and charges applied to land development, as well as more competition amongst developers would likely reduce land costs and potentially slow the escalation in housing costs, particularly in Sydney and Melbourne.