Land supply needs to improve if the Federal Government target of building one million new homes over five years from 2024 is to be achieved.

CoreLogic economist Kaytlin Ezzy says it is an ambitious goal given current land supply issues.

As demand increases for land so have prices for housing allotments, which rose 15.4% in the 2022 financial year.

The latest HIA Residential Land Report says prices appear to have risen close to consumers’ capacity to pay.

The report also predicts increases in interest rates will reduce borrowing power and make it harder for some buyers to purchase land, but land prices have continued to increase because of the supply shortage.

“Until there is a material change in supply, median land prices will likely remain elevated,” Ezzy says.

She says 975,000 homes were built in the five years to June 2022, but similar figures will be harder to reach in the next five years.