High-density cities boost housing affordability, says report

By Jarrod
3 Min Read

New findings from Domain have revealed that Australian cities with higher-density housing stock are benefiting from more affordable housing. 

The latest report from the property tech giant found that a shift to smaller block sizes had actually helped contain price growth in capital cities over the last five years when comparing house and unit prices per square metre. 

With blocks gradually declining in size to make room for the population boom in cities like Perth and Sydney over the last decade, analysts predict that the densified urbanisation helped drop the market value by as much as $300,000 in some places. 

Domain’s research found that if blocks had stayed the same size over the past 20 years, buyers would pay a whopping 44 per cent more for a home in Perth, followed by 16 per cent in Adelaide, 14 per cent more in Melbourne and 7.3 per cent more in Brisbane.

All cities have been trending towards greater densification, but Perth has experienced the most rapid decline, reaching a record low land size of 480 square metres—10 per cent lower than Melbourne.

Despite the dramatic shift in size, Aussie cities are still some of the world’s least densely populated. However, Domain’s Chief of Research and Economics, Dr Nicola Powell, warned that this is set to change as more people squeeze into the country’s city centres. 

“This housing demand needs to be countered with the growth of dwellings to slow the overall growth in home prices,” said Dr Powell.

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

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

“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.”

Dr Powell also said the density conversation could “create a little bit of fear” among Australians as the density shifts reshape the “big backyard” blocks we envision as the Australian dream. 

With population growth showing no signs of slowing, Powell called on the government to quash these fears with “well-defined” development plans to ensure land-use policies met Aussie housing needs.

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

“Knowing the price per sqm 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.”

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By Jarrod
Jarrod Brown combines his background in journalism, copywriting and digital marketing with a lifelong passion for storytelling. He has a strong passion for new and emerging consumer technology within the building sector. He lives on the Sunshine Coast - usually found glued to the deck of a surfboard.