In October’s federal budget, the Albanese government announced an ‘aspirational’ target to build one million well-located homes over five years starting from 2024.

However, land prices are soaring across the country, growing by 15.4% over the year to the June Quarter 2022, according to a new Housing Industry Association and CoreLogic report.

That’s the fastest rate of annual growth since 2004 (excluding the previous two quarters).

HIA senior economist Nick Ward said prices appear to have risen close to consumers’ capacity to purchase land.

“The increases in the cash rate will likely further constrain consumers’ ability to buy, risking a reduction in the number of homes expected to be built,” Mr Ward said.

“In order to achieve the Australian government’s target of building one million new homes over five years from 2024, the supply of land will need to improve in the near future and the cost decline.”

CoreLogic economist Kaytlin Ezzy said the government’s goal to complete one million new homes was an ambitious one, despite about 975,000 homes being completed over the five years to June 2022.

“While the interest rate rises seen over the past six months will have put some downwards pressure on land prices, until there is a material change in supply, median land prices will likely remain elevated,” Ms Ezzy said.

Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.

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