Domain report reveals increasing house and unit prices per square metre in Australian capital cities

Domain’s latest Price Square Metre Report 2024 shows that house prices per square metre and unit prices per square metre in capital cities have been trending upward over the past year and five years. This trend is driven by higher prices and smaller floor/land sizes, signalling a shift in housing dynamics and land utilisation.

The price per square metre is calculated by dividing the sold price by the land size or floor size, with the value calculated from the relevant region. It is an important tool for understanding changes in density and its interaction with price over time and within sub-regions across Australia.

The 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, as higher density translates to increased affordability. This stems from the fact that as the population continues to expand, available land remains finite.

Dr Nicola Powell, Domain’s Chief of Research and Economics, explained that 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 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% in Perth, 16% in Adelaide, and 14% in Melbourne,” said Powell.

Powell emphasized the need for a well-defined development plan from the 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 prioritizing increasing density from the government will help homeownership become more accessible for Australians.

To help buyers along their property search journey, Domain has identified the suburbs within 20km of the CBD that have the lowest cost per square metre for houses. The full Domain Price Per Square Metre Report 2024 is available on their website.