The latest data from the HIA-Cotality Residential Land Report has revealed a significant surge in residential land prices across Australia, with a 1.5 per cent increase in the final quarter of 2025, culminating in a 9.4 per cent rise over the year. This increase has been nearly three times faster than the growth in consumer prices during the same timeframe, according to HIA Senior Economist Tom Devitt.

“The median price of residential land sold nationally reached a new record high in the December quarter 2025, at $397,840,” stated Mr Devitt. This record-breaking figure reflects a broader trend seen across the country, with cities like Perth, Brisbane, and Adelaide leading the charge in setting new price benchmarks. Sydney, Melbourne, and Hobart have also recently joined the ranks of cities experiencing unprecedented land prices.

However, these soaring prices underscore a significant concern: the persistent shortage of available land ready for development. “There are also signs in a number of these markets that land shortages are limiting the number of lots being sold and threatening to constrain home building recoveries all over again,” Mr Devitt warned. He highlighted that the primary obstacle to home building over the past decades has been the lack of “shovel-ready” land coupled with insufficient infrastructure.

The issue of infrastructure, or rather the lack thereof, remains a critical bottleneck. “A lack of shovel-ready land and associated infrastructure has been by far the number one constraint on home building over the last few decades, even with more recent material price shocks and acute labour shortages,” explained Mr Devitt. He pointed out that there are “tens of thousands of homes that could commence construction around the country if the essential transport and utilities infrastructure was in place.”

However, the financial constraints faced by local and state governments often delay the delivery of necessary infrastructure, which in turn hampers the housing supply. Despite these challenges, the recent Australian Government Budget has made strides in addressing these issues, allocating $2 billion towards “enabling infrastructure.” Mr Devitt acknowledged this effort, stating, “The Australian government’s commitment is a positive medium-term step in the right direction.”

Cotality’s research director, Tim Lawless, also weighed in on the situation, noting the juxtaposition of rising land prices with the cooling of established housing markets. “We have seen Sydney and Melbourne home values gradually falling since December last year, while the smaller capitals are clearly losing steam as higher interest rates and affordability pressures bite,” he said.

Lawless emphasised that while there might be some affordability improvements as established markets experience softer conditions, the ongoing scarcity of new housing remains a significant concern. “It’s hard to see a material improvement in the affordability of Australian housing until we see a broad-based and sustained supply response underway,” he remarked.

The convergence of these factors paints a complex picture for Australia’s housing market. On one hand, the record-breaking land prices indicate strong demand and potential for growth in home building. On the other hand, the persistent lack of infrastructure and the resultant land shortages threaten to stifle this growth, perpetuating the cycle of limited housing supply and rising prices.

As policymakers and industry stakeholders grapple with these challenges, the focus remains on finding viable solutions to unlock more land for development and ensure the timely delivery of infrastructure. The hope is that these efforts will eventually lead to a more balanced and accessible housing market for Australians.