Why Is Land So Expensive? (11 Reasons Why)

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Brandon Porter

Brandon Porter is an architectural draftsman of 25 years and a self-proclaimed handyman. He loves renovating homes and making them his own, whether it's fixing up the plumbing or painting the walls.

Owning land is a significant achievement, regardless if you are a parent, a single professional, or a businessman. With land in your name, you have an asset and a sense of security.

Naturally, you would not consider buying land so important if the land comes at a low price. However, do you ever wonder why land is so expensive? Here is what I found!

Why Is Land So Expensive?

Land is expensive because there’s a limited amount of livable land on the planet, and the human population continues to increase. Also, some land is more desirable than others due to topography. Land access to essential amenities, transportation, economic activities, development regulations, market prices, and surrounding structures can make land expensive.

If you want to learn more about the factors that influence a land’s value, like increasing population, new structures, and access to essential amenities, keep on reading!

1. Quality Of Location Makes Land Desirable

A land’s location, climate, topography, and access to electricity and sewer lines play a huge role in the land’s value.

Naturally, flat plains that are shielded from extreme weather conditions are more valuable since they provide greater ease in development over the years.

Additionally, this type of land promotes safer and more convenient living conditions. Meanwhile, hilly and mountainous lands tend to be pricey but not as costly as flat plains.

Therefore, since land with a better location and climate is more marketable and livable, it can command a higher selling price.

2. Access To Economic Activities Gives Land A Higher Value

Usually, properties near a city’s central business district (CBD) cost so much because they are nearer to the center of economic activity.

Typically, the CBD is home to some of the biggest and most significant businesses in a country, making these areas safer and more developed.

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For businesses, land near economic activities means access to more clients and opportunities, while residents can be closer to workplaces and important institutions.

As such, these types of areas cost more.

3. Distance To Essential Amenities Provide More Convenience

A land’s distance to essential neighborhood amenities like hospitals, schools, fire stations, police stations, and shopping areas can exponentially drive up any land’s cost.

Generally, the closer you are to these essential amenities, the more time and money you save in the long run. Additionally, these amenities give you better security and convenience.

Land developers and owners know the long-term savings you will enjoy, making it justifiable to demand higher prices for their land.

4. Land Population Corresponds To Increased Developments

When an area experiences a boom in population, businesses flock to that area to meet essential needs for food, transportation, and housing.

However, long before economic activities pour in, projections of increased populations and, subsequently, their demands can make land prices go up at once.

Therefore, this is in anticipation of a land’s transformation in the coming years, and as these developments materialize, land prices only continue to increase.

5. Transport Linkages Provide Greater Advantage

Advanced transport linkages can enhance a land’s value. Mainly, this is because access to neighborhood amenities and economic activities is much easier.

As such, you can expect that lands in areas with multiple transport infrastructures support better living and business conditions and have higher land prices.

6. Verifiable Land & Property Records Reduces Inconveniences

6. Verifiable Land & Property Records Reduces Inconveniences

Most land that sells for a low price does not have authentic or complete land and property records. Consequently, these lands are more likely to encounter trouble in the future.

In contrast, lands with complete and verifiable land and property records are a sign of good history and a clean transaction. Moreover, they will make defending land ownership easier.

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As such, lands with these records are more expensive.

7. Development Regulations Introduces Further Taxes & Permits

Once purchased, land has to be developed for residential or commercial use. Regardless, you will incur taxes and related fees to start development.

All the costs you will incur from the laws and regulations governing floor area ration, premise level use, land tax, land use, and other development controls will influence a land’s price.

Technically, the more expensive the cost of developing a property, the more expensive the land gets.

8. Market Price May Fluctuate & Vary Per Land

Market price depends on the price agreed upon by the land owner and the buyer, but some factors can cause market prices to fluctuate and vary per land.

Apart from the overall real estate conditions in an area, a market price can be influenced by the selling price of properties that have been recently purchased in that location.

So, when land within that vicinity sells at a high price, the owner and the buyer will settle for a higher market price.

9. Land Use Determines The Land’s Value

A piece of land cannot be used for building a house or a commercial property if it’s not designed per the predetermined land use.

Generally, commercial land or a mixed-use development will have a higher rate of return in the long run and will cost more.

Likewise, the future value of land also impacts its current prices. Depending on these factors, a piece of land can be pricier than usual.

10. New Structures Can Bring The Land’s Value Up

A land’s qualities are not the only factors that buyers will consider. Surrounding lands and infrastructure also matter because they set the tone for your land’s use and value.

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Even if a neighborhood has fewer amenities, the newer buildings and roads will appeal more to buyers because they are more attractive and structurally reliable.

Technically, the newer and sounder the structures surrounding land, the higher the land’s price will fetch.

11. Land Is Limited

Ultimately, the factor that makes all land expensive is that land is limited as the world accommodates a bigger population, the smaller the space available for everyone.

Additionally, it is not only residential and commercial spaces that consume space. Natural habitats and resources are protected to fight climate change and empower economies.

Therefore, even with man-made lands created, the lifespan and reliability of these structures make them poor investments. As such, natural land all over the world is expensive.

To learn more, you can also read our posts on why room and board is so expensive, why studio apartments are so expensive, and why apartments are so expensive.

Conclusion

Land is one of the most important purchases an individual, a family, or a business can make.

It is also one of the most expensive.

Generally, land is costly because it is in high demand, but there is only limited land on this planet. Additionally, taxes and land development can make land prices go up.

Other factors that influence rising land prices are topography, accessibility, and land use. All of these combined make lands today more expensive than ever.

Author

  • Brandon Porter is an architectural draftsman of 25 years and a self-proclaimed handyman. He loves renovating homes and making them his own, whether it's fixing up the plumbing or painting the walls.

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