Land values surge in capital cities in Australia

Rising land values, scarcity of houses available for purchase and a desire for more space are keeping prices substantially higher compared to units.

As Australia’s real estate market proceeds with its post-pandemic bounce back with month-to-month property cost rises, new information shows that the cost distinction among houses and lofts has expanded by a record 45 percent throughout recent years.

According to CoreLogic’s data, there has been a sharp increase of almost $294,000 in the gap between house and unit prices due to three main factors: the scarcity of freestanding homes for sale, the desire for more space, and rising underlying land values.

Between March 2020 and January 2024, house prices in capital cities rose by 33.9 percent, or $239,000, while unit values in the capitals rose by just 11.2 percent — equivalent to $65,235.

In the past 12 months alone, house values have risen by 11 percent ($93,552) while unit values are up by 6.9 percent ($41,789).

“It’s an underlying scarcity pushing up the value of the land, not the structure on top of it,” said CoreLogic’s research director, Tim Lawless. “That’s probably been the key factor that’s driven up detached housing prices so much higher than units.