At the same time Sydney land prices are now approaching $1000 per square metre as volumes of sales continue to rise.

Strong demand from Melbourne's booming population – about 123,000 people are pouring into the state each year – has resulted in higher prices for smaller size land lots.

The median price of land reached $239,000 in the final quarter of 2016, up more than 8 per cent from $221,000 in the September quarter 2016, according to property group Oliver Hume.

During the same period the median lot size fell from 427 sq m to 416 sq m.

Housing Industry Association research pinpoints price rises and an increase in the volume of land sales.

The median dollar value per square metre of vacant land was $927 in Sydney, 32 per cent higher than in the next most expensive city Perth where it was $701.

The national land lot price rose by 3.3 per cent during the September 2016 quarter to a record high of $243,585, HIA senior economist Shane Garrett said.

With the exception of one quarter in 2015, the average time on the market for land in Melbourne had fallen or remained steady for more than three years, Oliver Hume research manager George Bougias said.