Key takeaways
Despite being one of the least dense countries, Australia has some of the highest home prices in the world.
Domain’s latest data shows that house prices per square metre and unit prices per square metre in capital cities have been trending upwards over the past five years, driven by higher prices and smaller floor/land sizes.
Density enhances affordability by increasing housing stocks, providing more opportunities for homeownership among Australians.
Despite being one of the least dense countries, Australia has some of the highest home prices in the world.
Domain’s latest Price Square Metre Report 2024 reveals that house prices per square metre (table 1) and unit prices per square metre (table 2) in capital cities have been trending upward over the past year and five years, driven by higher prices and smaller floor/land sizes.
Table 1. House price per sqm, land size and affordability change across the capital cities.
| Cities ranked from highest price per sqm to lowest. | |||||
| City | House price | Land size (sqm) | Price per sqm | Price per sqm 1-year change | Price per sqm 5-year change |
| Sydney | $1,458,170 | 563 | $2,590 | 5.1% | 49.5% |
| Melbourne | $981,492 | 534 | $1,838 | 0.8% | 32.8% |
| Canberra | $1,103,355 | 743 | $1,485 | -2.0% | 48.3% |
| Perth | $676,800 | 480 | $1,410 | 14.0% | 40.1% |
| Brisbane | $819,351 | 611 | $1,341 | 7.5% | 58.1% |
| Adelaide | $768,528 | 593 | $1,296 | 9.6% | 57.1% |
| Hobart | $695,304 | 648 | $1,073 | -2.7% | 59.1% |
| Darwin | $571,024 | 802 | $712 | -2.3% | 21.5% |
Table 2. Unit price per sqm, floor size, and affordability change across the capital cities.
| Cities ranked from highest price per sqm to lowest. | |||||
| City | Unit price | Floor size (sqm) | Price per sqm | Price per sqm 1-year change | Price per sqm 5-year change |
| Sydney | $825,470 | 97 | $8,510 | 1.4% | -0.6% |
| Melbourn e |
$557,308 |
76 |
$7,333 |
0.7% |
1.3% |
| Canberra | $594,352 | 88 | $6,754 | 0.0% | 39.5% |
| Hobart | $520,800 | 84 | $6,200 | -3.8% | 46.7% |
| Brisbane | $570,894 | 102 | $5,597 | 9.1% | 34.0% |
| Adelaide | $452,230 | 82 | $5,515 | 10.6% | 37.9% |
| Perth | $383,045 | 71 | $5,395 | 3.1% | 10.6% |
| Darwin | $408,842 | 133 | $3,074 | 2.9% | 20.0% |
All this signals a shift in housing dynamics, particularly regarding land utilisation.
The price per square metre is the sold price divided by the land size or floor size, with the value calculated from the relevant region.
It's an important tool to help understand the changes in density and interaction with price over time and within sub-regions across Australia.
A trend of shrinking land sizes
Price per sqm= Total Sold Price/Land or floor size
The relationship between land size and price per sqm is inversely proportional:
- As land size decreases, the price per sqm will
- As house prices increase, the price per sqm will
The Domain report reveals a trend of shrinking land sizes attributed to densification and rising land premiums.
While this may seem counterintuitive, it actually creates more opportunities for home ownership.
Higher density translates to increased affordability.
This stems from a fundamental truth: as the population continues to expand, available land remains finite.
Domain’s Chief of Research and Economics, Dr Nicola Powell said:
“Australia has some of the world’s least densely populated cities and is home to some of the most expensive property markets.
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."
She noted that 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% in Perth, 16% in Adelaide, and 14% in Melbourne.”
Table 3. If land size remained the same as 20 years ago house prices would be this much higher.
| Capital City | $ | % |
| Sydney | $80,286 | 5.5% |
| Melbourne | $136,006 | 13.9% |
| Brisbane | $59,679 | 7.3% |
| Adelaide | $124,396 | 16.2% |
| Perth | $300,343 | 44.4% |
| Canberra | $28,215 | 2.6% |
| Darwin | $16,372 | 2.9% |
| Hobart | $41,847 | 6.0% |
Dr Powell concludes that Land is finite and we need to ensure it is provided at low cost and utilised efficiently:
"This will require a well-defined development plan from our government to ensure land-use policies meet housing needs.
Estimates suggest a 10% increase in housing stock lowers prices between 15% and 30%.
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."
