Properties in Australia have shrunk in size, yet the price per square metre has skyrocketed, according to a new report.
Domain’s unique housing-affordability report, which analyses property land size and the price of a square metre (sqm), shows the average block size in larger capital cities shrank by 13 per cent in 10 years, yet the price per square metre has continued to increase.
Domain chief of research and economics Nicola Powell said the rising price per square metre reflected Aussies’ preference to live close to the city or coast.
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“Shrinking block sizes should help to slow the growth in house prices, as the cost of land is the major component in a purchase. However, per square metre, the land cost has not reduced - buyers are just purchasing less of it,” Powell said.
“As a result, areas with the largest decreases in block size have had growth in price per sqm outpace house price growth at a faster rate, meaning that the true cost to buyers is growing faster than the median house price alone suggests.”
Despite attempts to fit in more houses, development in cities like Sydney is lagging behind the influx of new residents and will only continue to increase prices, Powell said.
“Policy change, land release and property tax reform is needed to see a drastic change in price-per-sqm affordability to improve,” she said.
Unsurprisingly, Sydney is the most expensive market, with the average price per sqm at a whopping $2,466. This is followed by Melbourne at $1,811 and Canberra at $1,517.
Renters feeling the brunt too
It’s not just potential buyers getting hit by rising costs per sqm. Aussie TikToker Rach McQueen revealed a four-bedroom house in Tasmania - initially rented out in its entirety for $450 a week in 2021 - which had been split into two “conjoining villas”.
The conjoining villas were then advertised to be rented out for $770 combined.
McQueen said the alterations to the property were completed in around a month and were “largely DIY”.
“My sources tell me this property was approved for dwelling alterations but there was no approval for a subdivisional change of use,” McQueen said in her video.
McQueen added that as far as she was aware, the two villas still shared the same electricity and hot water systems.
The comments were flooded with outrage over the move, with the landlord branded as “greedy”.
“They’ve just made a great house into meh units. Honestly really disappointing,” one user commented.
“I used to live in this area and can confirm the greed here has gone mad due to the rental crisis! That’s an insane price for where it is,” another said.