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Spiralling land costs and the inadequate release of new land could inhibit a recovery in residential dwelling construction, according to a report from the Housing Industry Association and RP Data.
Median land prices have increased by 106 per cent in the last six years, posing a considerable barrier to new home construction which is desperately needed to improve dwelling supply according to the combined groups’ Residential Land Report released yesterday.
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HIA chief economist Harley Dale said soaring land prices combined with poor release levels and planning delays threatened the prospects of a substantial recovery in home building activity as well as the anticipated boost to the wider economy.
“We now have falling interest rates and a tripling of the First Home Owners Grant which should provide a boost to new home building and the wider economy in 2009.
“There is however a real risk that the perennial problems of inadequate land release and excessive planning delays prevent the industry from boosting supply to the extent required over the next 18 months. That would come at a cost to the entire Australian economy,” he said.
