The latest Housing Industry Association (HIA)-RP Data Residential Land Report suggests that there have been modest improvements in new home building activity in 2013.
The report shows that Australia's weighted median residential land value increased by 2.5 per cent to $198,152 in the March 2013 quarter, to be up 2.4 per cent when compared to the corresponding period in 2012.
The median value for capital cities rose 3.2 per cent over the March 2013 quarter to $225,781 (2.9 per cent higher than in the March 2012 quarter), while the median value for regional Australia was $155,807.
Commenting on the new figures, HIA Chief Economist, Harley Dale said, "From a very low base in 2011, residential land sales have displayed only modest upward momentum, a trend reinforced by the 4.3 per cent increase observable for the March 2013 quarter."
Mr Dale noted, however, that land prices have continued to find record highs, with Sydney and Perth leading the way significantly as the country's two most expensive land markets.
"'It's no coincidence that they [Sydney and Perth] are the two most highly taxed residential new home building markets in the country, due in large part to excessive taxes and charges related to land," Mr Dale explained.
"These costs aren't exclusive to Sydney and Perth – other capital cities are also witnessing upwards price pressures on serviceable residential land. Ensuring readily available and affordable land forms a crucial part of the wider policy challenge of addressing the excessive and inefficient tax and regulatory environment faced by the new home sector."
According to RP Data's Research Director, Tim Lawless, land sales are broadly starting to head in the right direction, however, affordability constraints, particularly in capital city markets, may limit the extent of the recovery.
"The consecutive quarterly increases in land sales are certainly encouraging, albeit the rate of growth has slowed from 11.9 per cent in the December 2012 quarter to 4.3 per cent in the March 2013 quarter," Mr Lawless said.
"With the increase in sales, there has also been a lift in land values, ongoing increases in the value of land may restrict the extent of the recovery given the already restrictive land prices in certain regions, in particular capital city markets."
Mr Lawless added that the increase in land sales has remained in line with the improving trend in sales across the detached house and unit markets throughout the second half of 2012 and early 2013.
"Lower interest rates are clearly encouraging broadly improving housing market conditions and hopefully this recent momentum can continue, especially with first home buyer incentives now being directed specifically at new construction across a number of states," Mr Lawless concluded.
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