The Housing Industry Association (HIA) residential land report shows the weighted median price of undeveloped land in Australia increased by 7.4 per cent in the March 2009 quarter to $172,490, following four consecutive quarterly declines.
HIA chief economist Harley Dale said the results poured cold water on doom and gloom assessments of residential property for 2009.
"Very low variable mortgage rates, the First Home Owners Grant boost, and attractive deals from volume builders have generated increased new home demand,'' Dr Dale said.
"The associated benefit to economic activity and employment will become apparent from mid 2009.''
The report, conducted in conjunction with RP data, found the most expensive market was Sydney with a median price of $259,000.
In regional NSW, median land prices grew by 6.1 per cent in the March quarter to $140,000. The figure was down 1.4 per cent over the year.
This compares to the most affordable market, regional Tasmania, with a median price of $79,750.
"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,'' Dr Dale said.
"These structural barriers led to an unnecessarily large surge in land prices in the last housing up-cycle.
"It is a no-brainer that the same thing will happen again unless we work tirelessly to reduce these barriers.
RP Data National Research Director Tim Lawless said the improvement in the vacant land market was well above the growth recorded across the broader housing market, where dwelling values increased by 2.1 per cent over the March quarter.
"The upwards trend in sales volumes suggests buyers are coming back into the market thanks to interest rates being at (49-year) lows and affordability returning to 2002 levels, not to mention the additional stimulus of the First Home Buyers Boost.''
In October 2008, the federal government doubled the first home owners grant to $14,000 for existing dwellings and tripled it to $21,000 for new homes.
The boost will be lowered to $10,500 for existing dwellings and $14,000 for new homes from October 1 before the grant reverts to $7000 on January 1, 2010.
