A recent report from the Housing Industry Association (HIA) reveals that rising land prices are the primary driver of Australia’s housing affordability crisis, not the construction costs as many believe.
Land prices today are more than five times higher than they were in 2000. While building costs have also spiked during the pandemic years, they are now returning to levels closer to inflation. At the same time, land prices are rising at approximately twice the inflation rate.
According to the report, the inflated land prices include the cumulative cost of rezoning, infrastructure provision, servicing, planning approvals, and government-imposed taxes and levies. Before a new lot can be sold, it must be connected to roads, water, sewerage, drainage, electricity, and other community facilities. These costs are generally added upfront to land values and passed on to new buyers. Hence, the average cost of greenfield lots increased by more than sixfold since 2000.
With construction costs stabilising and land becoming increasingly expensive, policymakers and industry experts are increasingly advocating for higher-density housing as a way to improve affordability and supply. As land cost becomes the dominant factor shaping housing costs, property investment strategies should also adapt. For investors, this shifts to maximising density to increase profit per square metre.
Traditional properties may struggle in high land-cost markets because one income must carry the entire land value.
That’s why rooming houses done right is one of Australia’s best high yield residential property strategies, with higher yield per square metre. As land prices continue to grow rapidly, high-yield, multi-tenant models like rooming houses become more efficient.
However – rooming house micro-development carries higher risk – especially if you do not know what you are doing. Infrastructure charges, zoning changes, and planning regulations can destroy profitability and development time.
A smart property strategy depends on careful land selection, conservative feasibility, and most importantly navigating state and local government planning frameworks. This is where the High Yield Property Club’s Wholesale Rooming House system adds strategic advantage and provides highest and best use outcomes. As the first stage of its two-part contract, HYPC provides a thorough land acquisition process, leveraging its extensive network and market insights to secure sites that meet strict investment criteria at competitive prices.
In this land-constrained market, investors who maximise income per block in strategic locations will have the greatest advantage. But time is running out for South East Queensland as changes in local planning regulations will soon see the micro-apartment style rooming houses come to an end. Victoria and NSW still have opportunity in sectors that are not oversupplied.
ROOMING HOUSE DEAL:
In line with this data, we’re releasing a rare Brisbane rooming house opportunity less than 10km from the CBD, delivering $107K+ per annum and positioned to benefit from this critical two-year window.
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Curious about our high yield, high growth, high social impact property investment strategy? Download our strategy document to discover how you can achieve similar results.
