SYDNEY'S residential land values rose 4 per cent last year, leaving most property investors facing higher land taxes. The rise in values will more than offset the cut in property taxes in the last state budget.

Land values in Sydney's eastern suburbs rose at a double-digit pace, more than making up for falls in values in the western suburbs, which are yet to bottom out.

Residential land value rises were overshadowed by commercial land values, which increased 8.2 per cent. In Sydney they surged 36 per cent, with values in the city rising 58 per cent.

The rise in values last year means many property investors will be hit with higher land taxes when they receive valuation statements over the next few weeks.

The strong demand for prestige property continues to drive the market in areas where buyers are more resistant to interest rate rises and other factors.

The council area with the highest median residential land value last year was Woollahra, where it was $1.19 million.