The impacts of the consecutive rate hikes by the Reserve Bank of Australia are manifesting not just on house and unit markets but also on land prices and sales.

According to Housing Industry Association (HIA) CoreLogic Residential Land Report, new residential land prices declined 0.2% over the September quarter to $328,954.

While the marginal change puts land prices at a relatively stable level compared to the previous two quarters, prices fell further on a per square metre basis, despite the ongoing desire for space and amenity that started amid the pandemic and pushed up lot sizes.

Another indicator of the slowdown in the market is the level of sales, which reached a new record low during the quarter with only 4,405 lots being sold.

HIA senior economist Tom Devitt said these trends do not reflect an end to the underlying shortages of land.

“Rather, they reflect a combination of worsening affordability and the shock of the RBA’s rate hiking cycle to consumer confidence and borrowing capacity,” he said.

“Declining prices, together with record low sales volumes, are disguising the underlying shortage of land in the short term.”

Interestingly, sales volumes started plummeting two years ago when land prices were on an uptrend. This indicates of a shortage of shovel-ready land in the face of strong demand.

Mr Devitt said any potential recovery to land demand would depend largely on the RBA’s future cash rate decisions.

“Once demand recovers, the underlying shortage of shovel ready land will further exacerbate the affordability challenges already facing aspiring homeowners and renters,” he said.

“Lower land prices and more affordable housing must be driven by a greater supply of land, shorter delivery times and fewer regulatory and tax imposts, not by the destruction of confidence.”

Here’s a comparison of median lot prices and sizes in capital cities in September 2022 quarter versus 10 years ago:

Median Lot Prices and Sizes – September Quarter 2012 vs 2022

Capital City

Median Lot Price ($)

Median Lot Size (in sqm)

September 2012

September 2022

September 2012

September 2022

Greater Sydney





Greater Melbourne





Greater Brisbane





Greater Adelaide





Greater Perth





Greater Hobart





CoreLogic economist Kaytlin Ezzy said it is unsurprising that land sales have continued to decline to new record lows, given that much of the available land supply was purchased over 2020 on the back of the HomeBuilder scheme.

“Similar declines have been seen through a number of construction metrics, including dwelling approvals, which have trended 10% below the decade average for the past six months, and dwelling commencements, which are tracking 32.4% below the peak recorded in June 2021,” she said.

And while she thinks that the recent quarterly decline in prices was “fairly mild”, the fall is likely to accelerate in the coming months.

“Australia’s residential land market typically follows the established dwelling market, which fell by 4.1% over the three months to September,” she said.

“Additional rate hikes, coupled with continually high construction costs, will add additional downward pressure on prices, with steeper declines expected in the December Quarter 2022, and into 2023.”

Photo by KML on Pexels.