A new HIA-RP Data Residential Land Report has found the volume of land sales fell to a record low in early 2011.
Sales were down by six per cent over the March 2011 quarter and were 43 per cent lower when compared to the March 2010 quarter.
Meanwhile, the weighted median land value in Australia increased by 0.8 per cent in the March 2011 quarter to $193,980, driven by growth of 2.7 per cent in the median value for Regional Australia (to $159,611).
Over the year to March 2011, the median land value was up by 4.4 per cent for capital cities and by 3.8 per cent for Regional Australia.
"The continuous and substantial decline in land sales volumes since late 2009 is a further indication that new home starts could reach one of their lowest levels seen since the mid 1990's," said HIA chief economist, Harley Dale.
"Softer demand is part of the story and the dizzy heights sometimes reached in speculation regarding a fictitious housing bubble in Australia certainly doesn't do anything for home building confidence.
"Nevertheless, the cost of serviceable land is the big barrier. Clearly this cost is excessive in a great number of areas around Australia. Governments need to address this substantial constraint on residential building which is generated by costs they impose.
"It is encouraging that across Regional Australia there remain ten local markets with a median residential land value of less than $100,000. These markets can be found across South Australia, Tasmania, Victoria, and New South Wales," added Harley Dale.
RP Data's national research director, Tim Lawless said that the current very low levels of land transactions are almost certain to result in a continuation, if not worsening in the weak number of dwelling approvals and commencements being reported by the Australian Bureau of Statistics.
"Vacant land sales are one of the best leading indicators of future home construction. With the number of vacant land transactions this low we can't expect any real improvement in the number of house starts over the short to medium term."
"The low transactions volumes come at a time when land prices keep rising and under supply issues intensify.
On a rate per square metre basis, the cost of vacant land has exploded in recent years across most cities.
Between March 2003 and March 2011 the rate per square metre price for vacant land has increased by at least 140 per cent in each capital city analysed except for Sydney."
