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Denser Suburbs Improve Affordability

Denser Suburbs Improve Affordability

While the NIMBYs may not appreciate it, suburbs with increasing housing density, are actually making properties more affordable.

Domain research says without urban densification over the past two decades, house prices in some locations would have soared.

Its analysis of house prices and dwelling size says the shift toward smaller blocks has been effective at containing price growth.

Domain says if blocks had stayed the same size over the past 20 years, buyers would be paying 45% more for a home in Perth, 16% more in Adelaide, 14% more in Melbourne and 7% more in Brisbane.

In Hobart and Sydney, prices would be 6% higher, Darwin and Canberra, 3%.

Domain chief of research and economics, Nicola Powell, says despite increases in density Australian cities are still among the least dense in the world.

But she says the need to accommodate growing populations is leading to greater densification and a decline in average land size.

She says Perth in particular has experienced a rapid decline in land lot size, which is now 480sq m on average, about 10% lower than Melbourne.

“Declining land sizes had contained the house price in the city but without the shrinkage, house prices would have been $300,000 higher today,” Dr Powell said.

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

She says estimates suggest a 10% increase in housing stock lowers prices between 15% and 30%.


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