The cost of building homes in Sydney may increase further as the price of residential land in the city amounted to $1,051 per square metre, according to a Housing Industry Association-CoreLogic report.
The Residential Land Report noted that the increase took place in the second quarter of 2017. Nationwide, the median price for a vacant housing lot rose 8.5 per cent year over year to $256,683.
Sydney’s residential land prices for the quarter made it a tad too expensive than other cities. In Melbourne and Perth, land prices cost $677 per square and $730 per square metre, respectively. Part of the reason for the increase involves the high number of residential transactions in capital cities. Almost two-thirds of transactions happen in these areas, while 37.7 per cent take place in local places.
During the second quarter, Sydney accounted for 10 per cent of the total transactions despite the cost of buying land. Danni Addison, Victorian chief of the Urban Development Institute of Australia, expects prices to continue its upward trend if supply remains scarce. However, demand for new homes will still prompt developers to develop more land and use earth-moving equipment with rubber tracks in Sydney.
Some business may benefit from the increasing demand for homes, yet most buyers would struggle from the high price of residential land. HIA senior economist Shane Garrett said that a short supply of land “compounds the housing affordability problem” due to the pace of price growth.
Garrett urged federal and state governments to invest in infrastructure and streamline zoning projects. Addison agreed and said that there is a need to streamline the timeframe on housing construction to meet the growing demand.
The report highlights the huge gap between land prices in Australia’s capital cities. Can you afford to buy a house and lot in Sydney?