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Land costs rising in Australian capitals

The cost of land in Australia's capital cities is on the rise, with the median now 8.1 per cent higher than a year ago. 

This is according to the findings of the latest CoreLogic trend data, which shows that this could be driving cost increases in the property market. 

Land in capital cities was found to be an estimated half the cost of the average home, News Australia reports. 

The price for the median urban block was approximately 65 per cent higher than it was regional areas - and this is the largest gap has been between the two prices in 13 years. 

Vacant lots in capital cities are now 231 per cent more expensive than land outside these areas, which the data indicated was the largest difference on record. Land in these cities has shrunk to a median size of 450 sq m, compared to 812 sq m across the combined regional areas - almost twice as much as in the capitals. 

Cameron Kusher, economist at CoreLogic, said this divergence in land value is being played out in the property market. 

He suggested that action to increase the amount of land available for development, in addition to lowering land fees and charges and encouraging  more competition among developers could all serve to reduce the cost of land. 

"Potentially, this would slow the escalation in housing costs, particularly in Sydney and Melbourne," Mr Kusher remarked. 

"On a rate per square metre, housing costs have increased across each capital city over the past year. Again Sydney and Melbourne recorded the greatest increases over the period."

Average land costs were highest in Sydney at $422,000 for 486 sq m, whereas Hobart had the lowest costs of the capitals at $160,000 for 806 sq m. 

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