Land values rise
Residential land values soared by more than $1 trillion dollars in Australia over the three years to June, and by more than half a trillion dollars (+15 per cent) in the last year alone.
Since 1989 the total value of land in Australia has surged by well over $4 trillion, with residential use accounting for nearly $3.5 trillion or more than 85 per cent of the increase.
Since dwelling prices over the long run are ultimately a derivative of the land value which sits underneath, I always recommend capital city properties as those with the greatest potential for price growth.
Particularly I look at those located within easy commuting distance of the Central Business District and with a high percentage land value content, which typically means steering well clear of high rise tower blocks.
Since 2012, the biggest paper gains for property speculators have been seen in Sydney, with the total value of residential land in New South Wales spiralling by more than 53 per cent in just three financial years.
Victoria has also seen land values increase by 35 per cent over the same time period, with broadly similar gains in land values across the next three most populous states in the 20 -22 per cent range.
Of course, population growth accounts for some of the increase in residential land values, and so too does the prosperity of the local economy, the lower cost of capital, and the relative scarcity or availability of the land in question.