Adelaide Overtakes Perth as Most Affordable Capital

Perth has lost its crown as Australia’s most affordable capital city for new land, with prices surging 34 per cent in 2024, according to the Urban Development Institute of Australia’s (UDIA) annual State of the Land Report, released this week. 

The median land price in Perth now sits at $329,000, whilst Adelaide has taken over as the most affordable capital with a median lot price of $307,000.

This continues the upward trend observed earlier in August 2024, when the UDIA reported that Perth’s average new block price had reached $305,177—the first time it had topped $300,000 since the 2007 boom.

UDIA WA chief executive officer Tanya Steinbeck attributed the price increase to the ongoing housing supply shortage impacting Western Australia’s residential property market.

“This is simple demand versus supply theory in practice,” Steinbeck said. “We have seen demand for housing in WA continue to escalate as our population increases, economic conditions remain strong and unemployment is low.”

The report reveals that Perth’s greenfield land market experienced a second consecutive year of strong activity, with annual sales up 23 per cent compared with 2023 and 50 per cent higher than the decade average, totalling 11,256 sales.

Sydney remains the nation’s most expensive greenfield land market, with median lot prices growing 4 per cent to $666,667.

The average land rate in Sydney reached $1617 a square metre—45 per cent higher than the combined capital city average.

Melbourne’s median lot price for 2024 was $403,000, reflecting a modest 2 per cent growth, whilst south-east Queensland recorded an 11 per cent increase to $417,000.

The ACT recorded the second highest median lot price at $651,750—a 4 per cent decrease from the previous year.

Despite developers ramping up supply, with annual completions up 24 per cent and house approvals up 47 per cent, the market remains under pressure. Stock levels are critically low, with available residential lots equal to just 1.4 months of demand as of December 2024.

Perth’s land rate has increased to $877 a square metre, which remains 21 per cent lower than the combined capital cities average. By comparison, Adelaide’s average land rate is $751 a square metre, making it 33 per cent more affordable than the national capital city average of $1116 a square metre.

▲ UDIA WA chief executive officer Tanya Steinbeck.

The multi-unit sector in Perth has also faced challenges, with sales plunging to near record lows in 2024 at only 1795 units sold.

Despite this drop in volume, the median sale price of new units increased to $575,000—a 29 per cent rise from the previous year.

“We reached near record lows for multi-unit sales during 2024,” Steinbeck said. “New unit approvals are up, which is promising, but we need to focus on making these types of projects more financially viable so that those approvals are converted to housing on the ground.”

The UDIA forecasts a significant shortfall in meeting the National Housing Accord targets, predicting a cumulative five-year delivery of about 79,000 new homes for Greater Perth, which is about 117,000 homes short of the target.

Steinbeck said environmental constraints and lack of enabling infrastructure were the biggest barriers to bringing more land to market.

“While the new land market has been able to ramp up in the last couple of years, it is becoming more complex to bring large swathes of developable land to the market across the Perth Metro region,” she said.

The report points out the need for a balanced approach to housing delivery that supports greenfield development and increased medium and higher density housing options.

UDIA WA has also called for the expansion of the Infrastructure Development Fund into an Infill Development Catalyst Fund to support multi-unit project viability.

“The housing challenge before us remains significant, and government at all levels, along with industry, need to continue to collaborate so we can deliver the homes we need, faster,” Steinbeck said.