Why Does Land Seem Scarce and So Costly? - McCarthy Group

Covering over 7.5 million square kilometres, Australia has the 6th largest land mass in the world. So why does land in Australia seem scarce and so costly?

With a population density of just 3 people per square kilometre – almost the same size of the average Aussie family – Australia is one of the most sparsely populated countries on Earth. The USA, for example, is only 2 million square kilometres larger than Australia, but has a population density of 34.56 people per square kilometre. Compare that again to India with a staggering 350 people per square kilometre!

Less than 0.3 per cent of Australia is urbanised. So there is plenty of land in Australia, and there is substantial land for growth around all of the nation’s major capital cities. So what’s the problem? Are we short of builders? Is the land not suitable for urban development? Don’t people want to own a home of their own? Why does land seem so scarce? And don’t even mention the price of it!

No really, don't mention the price of it.

No really, don’t mention the price of it.

The biggest issue of the extensive regulation of land and the high fees and costs in bringing developed land to market come as a result of state government charges.

When land is developed, considerable investments in infrastructure and services are required, ranging from water, electricity, the layout of roads, and the provision of schools, hospitals and transport facilities.

Typically these costs don’t get apportioned across the broader community, and instead are allocated against the specific areas that are being developed. This leads to huge costs being laid at the doors of the developers, and they, in turn, have to pass them on to the buyers of the land.

HIA chief economist Harley Dale was quoted as saying, “A lack of timely and adequate land supply, high development charges and taxes, and onerous planning regulation still present a serious challenge to new home affordability.”

What is the price of your plan?

What is the price of your plan?

In New South Wales, for example, fees and government charges add about $150,000 to the price of a block of land. This is why the rate of construction of new homes has been falling in NSW for so long.

One thing is certain: land prices are a complex issue that has arisen over decades. The extremely high costs associated with land development will not go away overnight, and land costs will simply go up as the cost of development increases, over-regulation remains in place, and demand exceeds supply.

Those who have land are the fortunate ones, as well as those who are able to use the investment property concept to fund the purchase of more. For the rest, it is true to say that the Australian dream of owning their own homes seems to be sliding further away, and will remain just that: a dream.

Owning property might seem out of reach, but with tailored McCarthy property solutions a secure future may be open to you!

Get Started Today!

Kind Regards,

Stephen McCarthy
CEO McCarthy Group

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