House land size shrinks in key cities in Australia

Oksana Patron

13 February 2023

The average block size has shrunk by 13% over the past decade in the largest Australian cities, with Perth and Melbourne registering the biggest drop in median block size sold, according to Domain.

Sydney remains Australia’s most expensive capital city, with the price of a square metre 36% more expensive (at $2,466 per sqm) compared to the second most expensive city – Melbourne.

At the same time, buyers can find the best value for money, at around $1,200 per sqm, in Adelaide, Brisbane and Perth, as according to data from Domain.

Interestingly, regional areas were hit hardest with above-average price per sqm increases, in particular in areas such as Albury (NSW), Ballarat and Bendigo (Victoria) and Maroochy (Queensland).

However, cities are still lagging behind in fitting in more houses to address an influx of new residents, particularly in Sydney.

Nicola Powell, Domain chief of research and economics, warned that although a shrinking block sizes was expected to help slow the growth in house prices, the land cost has not reduced but rather saw buyers being forced to purchase less of it.

According to Powell, there were a number of changes needed in order to improve affordability in price per sqm and this included a policy change, faster land release and property tax reform.

Powell also stressed that escalating price per sqm of a house reflected Australian housing preferences such as living closer to the city or the coast in search of a better lifestyle and proximity to amenities and infrastructure.

“The city fringes offer a much cheaper price per sqm and with more jobs moving to commercial hubs such as Parramatta and Macquarie Park, these outer areas will become more attractive due to the potential for lower workplace commute times,” she added.

Also, multi-region cities would help to distribute wealth across a larger area while providing equal access to education, healthcare and employment opportunities which would, in turn, help spread the cost per sqm and divert interest from CBDs.

“For buyers, it’s valuable to understand the price per sqm of any home you are looking at to standardise the cost of housing, making it easier to compare different sizes geographically.

“Some cities have a higher median house price where often dollars go further in terms of what you can actually afford while others have neighbouring suburbs with vastly different prices per sqm due to gentrification so it’s worth noting where to look.”