Australia’s Land Price Obsession Is Driving Us Into Another Depression

By Bryan Kavanagh,

31 Ocrober 2025

For decades, economists have warned of inflation, debt, and productivity crises — yet few have dared to identify the disease at the heart of our economy: the relentless inflation of our land prices. This failure, more than any other, explains why we continue to lurch from one boom-and-bust cycle into the next.

Land prices are not just another asset class. They are the clearest measure of a nation’s socioeconomic health. When they spiral beyond the productive capacity of its citizens, it signals that wealth is being extracted, not created. Unfortunately, the economics profession has spent the better part of a century pretending otherwise — acting as high priests to a failing orthodoxy that refuses to confront its errors.

Australia has long understood the importance of measuring land values accurately. Since the mid-19th century, we have had systems for publicly assessing land, distinguishing it from improvements or buildings. Yet many overseas economists — and even some local ones — still insist that land cannot be properly separated from the total value of real estate. They’re wrong; and Australia’s own data proves it.

In 1945, the nation’s total land value stood at just $1.83 billion. By 1970, it had soared to $22.45 billion — an average annual increase of 10.6%. Even that growth looks modest beside what followed. The 1970s and 1980s saw spectacular surges: land prices jumped 33.7% in 1972, 57.9% in 1980, and more than 40% in 1989. Each of these spikes was followed by a predictable recession, as speculative fever gave way to financial collapse.

Fast forward to today. As of June 2025, Australia’s total land value stands at an extraordinary $10.37 trillion — more than 400 times the 1971 figure. That equates to around $375,000 for every man, woman, and child. It’s the largest land bubble in our history, and the signs of strain are everywhere: surging cost-of-living and household debt, falling affordability, and stagnant productivity.

Each cycle has been larger and more destructive than the one before. When this bubble finally bursts — and it will — politicians will, as always, blame “international events” or “market forces.” But the truth is closer to home. It lies in our collective refusal to recognise that rising land prices are not a sign of prosperity, but of a sick economy that rewards speculation over production.

Until we confront the central role of land in our economic malaise — and reform how we tax, measure, and discuss it — we will remain trapped in a system that enriches a few at the expense of the many. The next depression won’t be an accident. It is the inevitable consequence of decades of willful blindness.

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References:

Terry Dwyer “The Taxable Capacity of Australian Land and Resources“, Australian Tax Forum, Volume 18 Number 1, 2003.

Australian Bureau of Statistics, Catalogue 5204, Table 61.