Why property site size is shrinking across Australia

Key takeaways

The average site area of new house approvals decreased considerably over the last 10 calendar years.

The average floor area of new houses approved in Australian capital cities decreased only 1% (or 3 square metres).

Plot sizes are falling, this will likely only continue as Australia’s population continues to grow.

Site sizes for new build properties have shrunk 13% over the past decade across the five major Aussie capitals, while house sizes remain unchanged.

Data from the Australian Bureau of Statistics (ABS) shows that the average site area of new house approvals decreased considerably over the last 10 calendar years, by 64 square metres (-13%), whilst the average floor area decreased by only 3 square metres (-1%).

Of all capital cities, Brisbane saw the largest decline, with housing land sizes decreasing by 20% (112 square metres) on average.

With more available and affordable land relative to Australia’s largest capitals, demand for land in Brisbane has increased.

This is a result of interstate migration to Queensland and a surge in the number of locals building homes.

Sydney was not far behind, with blocks of land shrinking by 18% over the past 10 years.

Melbourne’s site sizes fell 12% over the same period while Adelaide’s site sizes decreased the least (-6%).

Perth, which had the smallest average site areas of the capital cities across the 10-year period (at just 399m2 today), had an 11% decline.

But floor areas have barely changed

While the average site area of new house approvals decreased considerably over the last 10 years, the average floor area of new houses approved in Australian capital cities decreased only 1% (or 3 square metres) - although there was some volatility for the duration over the period.

The combined trends of smaller site areas and largely unchanged floor areas of house approvals over time show that Australians are building similar-sized houses with smaller yards, the ABS said.

So, why is this happening?

It’s clear then, that the combined trend of smaller site sizes alongside unchanged floor areas means that over the past decade, Australians are slowly building similar-sized houses on smaller plots of land.

According to the ABS, this is driven by 3 key factors.

1. Increased land cost

Property prices have steadily increased over the past decade, before soaring during the past 2 years amid the pandemic lockdown.

It makes sense then that the cost of land has also surged.

As Australia’s population expands and our suburbs become more heavily populated, the amount of available land is falling meaning properties on larger plots come at a premium price.

But the mismatch between property prices, wage growth and cost of living means instead of paying the higher prices, many Australians are instead opting to buy or build houses on smaller blocks of land.

2. More new houses in urban infill locations

Secondly, there is a greater proportion of new houses being constructed in urban infill locations.

Put simply, the ‘urban infill’ identifies underutilised areas in existing suburbs to build more housing.

This usually goes in line with an overhaul of transport and infrastructure.

3. More 2-storey houses 

This one goes hand-in-hand with the larger population and more expensive land sizes.

The answer: more 2-storey houses.

The trend for building duplexes and townhouses to maximise living on smaller land parcels has certainly boomed over the past decade, likely skewing the data, as buyers snap up large plots, demolish older houses and build 2 (or more) in its place.

Focus on investment grade

The data shows that plot sizes are falling, this will likely only continue as Australia’s population continues to grow.

After all, there is only a finite volume of land on which to build, especially in our major cities or popular lifestyle areas.

What is important amid all this is to make sure you focus on what makes an investment-grade property, rather than be blinkered by plot sizes alone.

And remember, not all land is created equal, location does 80% of the heavy lifting of a property’s capital growth.

About Bryce Yardney Bryce is a property development specialist, having successfully sourced, project managed and completed hundreds of development projects for Metropole’s clients, helping them create substantial wealth.