Unlocking Australia’s future: embracing housing density for affordable living


Australia needs to embrace greater housing density, particularly in the capital cities, as a means to combat the housing affordability crisis.

According to Domain’s latest Price Per Square Metre Report, property prices per square metre have risen considerably over the past five years, driven by higher prices and smaller floor and land sizes.

Domain’s Chief of Research and Economics Dr Nicola Powell said there was a trend for shrinking land sizes attributed to densification and rising land premiums.

And while this might seem counterintuitive, it provided more opportunities for home ownership as higher density translated to increased affordability.

“Australia has some of the world’s least densely populated cities and is home to some of the most expensive property markets,” Dr Powell said.

“Despite this, the desire of people to live in the capital cities has meant that more are trying to squeeze into them and are competing for housing. 

“This housing demand needs to be countered with the growth of dwellings to slow the overall growth in home prices.

“The decline in land size is due to the increased urban density. 

“While it might seem surprising, this shift is essential for preserving and improving housing affordability for the broader population. 

“Without the shift towards greater density and smaller land sizes over the past two decades, house prices would be vastly higher than they are today – higher by 44 per cent in Perth, 16 per cent in Adelaide, and 14 per cent in Melbourne.”

The report found that Sydney currently has the highest price per square metre for houses at $2590 per square metre.

That’s 5.1 per cent higher than a year ago and 49.5 per cent up on five years ago.

Price per square metre is calculated by dividing the total sale price by the land or floor size.

Melbourne has the second highest house per square metre at $1838, which is 0.8 per cent up on a year ago and 32.8 per cent higher than five years ago.

This is followed by Canberra ($1485sq m), Perth ($1410sq m), Brisbane ($1341sq m), Adelaide ($1296sq m), Hobart ($1073sq m) and Darwin ($802sq m).

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For units, Sydney ($8510sq m) and Melbourne ($7333sq m) also lead the way.

“Land is finite and we need to ensure it is provided at low cost and utilised efficiently,” Dr Powell said.

“This will require a well-defined development plan from our government to ensure land-use policies meet housing needs. 

“Estimates suggest a 10 per cent increase in housing stock lowers prices between 15 per cent and 30 per cent.”

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The report also revealed the suburbs within 20km of the CBD with the lowest cost per square metre for houses. 

In Sydney, South Granville has the lowest price per square metre at $1888, while in Melbourne Coolaroo is the cheapest at $850.

The cheapest capital city suburb is Anstead in Brisbane, where the price per square metre for houses is $151.

“Knowing the price per square metre helps buyers find where the land is cheaper and identify bridesmaid suburbs, but prioritising increasing density from the government will help homeownership become more accessible for Australians,” Dr Powell said.

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