Property sales volumes dropped during the September 2010 quarter by 57 percent compared to the same period in 2009 based on the report released by the Housing Industry Association.

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Meanwhile, the median value of land in Australia grew 2.8 percent in the September 2010 quarter to $186,629. Over the year to September 2010, the median value is up 5.2 percent.Residential land value in capital cities grew 5.3 percent over the year to the September 2010 quarter while land value for Australia’s regional areas grew 4.4 percent over the same period.

“The results show further increases in land prices and very low sales volumes, both of which bode poorly for housing supply and affordability in Australia,” said HIA Senior Economist Andrew Harvey. “Land price appreciation is a key cause of Australia’s housing affordability problem, with higher prices cascading through the residential market to push up the price of both new and existing houses."

Harvey said Australia’s expensive land prices were due to a failure of policies at all levels of government to achieve a timely supply of land for residential development.“It’s time that serious and urgent policy action is taken to ensure there is sufficient serviced land for residential building,” Harvey said.

RPdata.com senior research analyst Cameron Kusher added that the escalating cost of land was not only impacting the affordability of new homes but also that of existing housing product.“When the median price of a block of land in Sydney is $269,000 it’s easy to see why affordability is spiraling out of control. When you add on top of the land cost: professional fees, government charges and the actual cost of constructing a home it’s no surprise that many Australian’s are forced to remain in the rental market, paying off others mortgages,” said Kusher.