RTTNews - The cost of land across Australia was increasing, the latest residential land report from the Housing Industry Association said Friday.

The HIA's chief economist, Harley Dale said, an increase in median land prices in the March 2009 quarter poured further cold water on 'doom and gloom' assessments of residential property in 2009.

The economist noted that very low variable mortgage rates, the First Home Owner's Grant boost and attractive deals from volume builders generated increased new home demand. Further, the economist said the associated benefit to economic activity and employment would become apparent from mid-2009.

However, Dale noted that a lack of timely and adequate land supply, high development charges and taxes, and onerous planning regulation still posed a serious challenge to new home affordability.

A wide array of indicators released over the last month has shown that the prospects for further modest improvements in residential property prices are likely, the HIA said.

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