Lot sales fell 10.3 per cent in that quarter compared to the previous one, and 20.4 per cent from the same period in 2016. The reduction in land turnover during the quarter was higher in capital cities than regional markets.
As supply of new land fell, prices of land also rose, reflected by a 10.9 per cent annual increase in median lot prices.
The median price of residential land hit a new all-time high of $267,368 per lot nationally by the end of September.
"Transactions on the land market continue to drop, indicating that supply is simply not matching demand sufficiently," HIA senior economist Shane Garrett said.
"The high cost of new residential land is at the heart of Australia's housing affordability crisis."
The 6.5 per cent rise in land prices was high, especially when compared with Sydney's house prices which fell 2.5 per cent in the quarter to January, CoreLogic said.
The increase in lot prices was accompanied by a fall in lot sizes. Across the six capital cities covered in the report, the median lot size has declined to 433 square metres from 553 square metres 10 years ago.
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