A shortage of available land for housing in Australia's capital cities is driving up prices.
The Housing Industry of Australia (HIA) and RP Data say the volume of land sales in the final three months of 2013 fell 1.8 per cent, while median land prices rose 4.2 per cent to the highest level in the survey's history.
HIA's senior economist Shane Garrett said the figures show that there is a serious supply shortage for the residential land market.
"For the second consecutive quarter, we have seen turnover in the market decline while at the same time lot prices have shown significant increase," he said.
"Policy makers have to act quickly to ensure that the supply of land is boosted. Doing so will greatly improve the chances of sustaining the recovery in residential construction."
The HIA-RP Data Residential Land Report also found that the median residential land value for Australia's six state capital cities rose 22.3 per cent in calendar year 2013.
RP Data research director Tim Lawless said the falling land supply combined with the upturn in the housing market would hurt housing affordability.
"With vacant land prices continuing to rise at a time when volumes have moved lower we can surmise that demand is exceeding supply which, in turn, drives prices higher," he said.
"With housing affordability coming increasingly under the spotlight, an improvement in the flow of land supply would be a welcome scenario."
