Soaring Land Prices Significantly Impact New Home Construction in Australia, Report Finds

Australia. The escalating cost of residential land has significantly impacted new home construction in Australia. A report from the housing construction industry association indicates a massive surge in land prices for new home builds across the country.

According to the report, land prices for new home construction have increased by over 513 percent since the year 2000. During the same period, the cost of construction and skilled labor rose by approximately 150 percent.

The report notes that in the year leading up to September 2025, the national average land price increased by more than 10 percent, which is three times the rate of inflation for the overall economy.

A federal economist stated, "Land is the primary driver behind the increase in housing prices in Australia. Due to government policies, infrastructure costs, delays, and planning fees are being incorporated into land prices, forcing new homebuyers to bear the cost."

He added, "The key to solving this is addressing the shortage of immediately developable land." Australia's federal, state, and regional governments set a target in 2023 to build 1.2 million new homes nationwide within five years.

According to the 2025 annual report from the National Housing Supply and Affordability Council, 177,000 new homes were built in 2024, falling short of the estimated demand of 223,000.

The report forecasts that 938,000 new homes will be built over the five years starting from 2024, but no state or territory is likely to meet its national target.