Newcastle land prices jumped 30 per cent in the June quarter, and the Housing Industry Association expects them to stay high for years due to a lack of supply.
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The HIA-CoreLogic Residential Land Report shows the median price per square metre for Newcastle and Lake Macquarie land was $764 in June, up almost a third on the March quarter.
The median price paid for a block of land in the two local government areas was $415,000, up from $350,000 in the previous quarter and $320,000 a year earlier.
It is the first time the median land price has passed $400,000 in Newcastle and Lake Macquarie.
The June prices reflected a low number of sales, only 87, in the quarter, down from 174 in December 2020.
The Newcastle Herald reported this month that the median price of a detached house in the city had rocketed past $800,000.
The HIA has long argued that governments need to increase the supply of land for residential development.
HIA Hunter executive director Craig Jennion said the data was a "clear sign of a shortage of zoned land in the local market".
"The process of turning a paddock into shovel-ready land can take over a decade in Australia," he said. "It is difficult for land supply to respond to changes in the short term, and we are starting to see the impact of this with the increase in prices."
Mr Jennion said the data reflected a shortage of land after a surge in buyer demand when the HomeBuilder stimulus grants were announced last year.
"Like the broader national picture, I expect the demand and therefore the shortage of land to run into 2022 and perhaps 2023," he said.
Newcastle was the eighth most expensive regional land market in Australia in June by square metre price.
In the rest of the Hunter, median prices fell slightly from $225,000 to $214,000 in the past year while sales volumes dropped back to about 200 per quarter after spiking to 422 in September 2020.
Australian Bureau of Statistics consumer price index data issued this week showed the cost of new dwellings rose 3.3 per cent in September, a 20-year record.
"Continuing strong demand for housing construction enabled builders to pass through increases in costs for both materials and labour," the ABS said in its CPI report.
The HIA-CoreLogic report found the cost of land had risen 8.5 per cent across Australia, twice the increase in the cost of building materials.
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Michael Parris
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
