I have shown repeatedly that the escalation of Australian housing values since the late-1990s has been caused, primarily, by an increase in land values rather than construction costs (see below charts, which are current to June 2014).
Core Logic-RP Data has updated its statistics showing the extraordinary escalation of land costs across Australia’s capital cities, with median lot prices jumping by 6.2% in the year to December 2014 to the highest level on record ($257,500). Median lot prices have also risen nearly five-fold over the past 20-years:
There is a sliver of good news, however, with the size of the typical lot actually rising slightly in the year to December 2014 – from 462 sqm to 480 sqm – reversing the falling trend over the past two decades:
And with the rising median lot size, the actual price per square metre remained fairly steady in the year to December 2014 – up from $541 per sqm to $543:
Nevertheless, the price per square metre of land has rocketed by 546% – from $84 a square metre in 1994 to $543 currently – a truly extraordinary result given Australia’s abundant land supply!
The next table shows the split-out by major capital city, with Sydney land the most expensive in raw terms, but Perth’s the most expensive in rate per square metre terms:
Nevertheless, lot prices everywhere, except Hobart, are a complete and utter rip-off, with even a backwater like Adelaide super expensive.
If ever there was a time to relax artificial restraints on land supply and the first-user-pays-all principle, as well as introducing a broad-based land tax, it is now. Australia’s expensive lot prices are a direct result of idiotic government policy, pure and simple.
The full RP Data report can be read here.