The New Landscape of Australian Housing: Embracing High-Density Living for Affordability - Property Inc

The New Landscape of Australian Housing: Embracing High-Density Living for Affordability

As Australia grapples with soaring land costs and dwindling availability, a recent report highlights a pivotal shift towards higher-density living as a viable solution for enhancing housing affordability. According to Maria Gil’s insightful article, “What would make Australian housing more affordable? Australia’s future housing market reality check,” this adjustment in living preferences is seen as crucial for Australians aiming to own property in the foreseeable future.

The Domain Price per Square Metre report unveils a stark increase in land prices across Australia, with Sydney leading the surge. The median price per square metre in Sydney now stands at a staggering $2590, notably outpacing Melbourne’s $1838, and more than doubling over the past decade. This pattern is mirrored in cities traditionally considered more affordable, such as Perth, Brisbane, and Adelaide, where median prices have also doubled since 2013.

Dr. Nicola Powell, Domain’s chief of economics and research, emphasizes the unintended role of shrinking land sizes in curbing price escalations. “Without smaller land sizes, without the density we already have, overall house prices would be even higher than what they are today,” Powell states, advocating for a continued trend towards reduced land ownership as a means to preserve and enhance affordability.

This transition, however, requires a reevaluation of the quintessential Australian dream. The notion of owning a quarter-acre block with a spacious backyard is evolving, making way for a reality where Australians own less land than previous generations. “It’s reshaping what we vision as the Australian dream,” Powell remarks, suggesting that further “land shrinkage” is necessary to maintain housing affordability for the broader population.

The challenge of housing affordability is compounded by supply constraints, as noted by PRD chief economist Dr. Diaswati Mardiasmo. The scarcity of developable land, hindered by government ownership, protection statuses, or unsuitable conditions, poses significant obstacles to residential development. Additionally, strict planning rules at local and state levels further complicate efforts to increase higher-density housing, which is deemed crucial for addressing the affordability crisis.

Despite these challenges, there’s a growing acceptance among Australians for higher-density living arrangements, such as apartments and townhouses. A Grattan Institute survey indicates a strong preference for such accommodations, with 59% of Sydneysiders and 52% of Melburnians expressing a desire to live in higher-density properties.

This shift is not merely a matter of necessity but also reflects changing family structures and lifestyle preferences. As household sizes decrease, the demand for smaller, more efficient living spaces rises, signaling a broader transformation in Australian residential preferences.

In essence, embracing higher-density living emerges as a strategic response to the complex challenges of housing affordability in Australia. By reimagining the Australian dream and adapting to a new reality of urban living, Australians can navigate the constraints of an increasingly competitive property market, paving the way for more sustainable and accessible housing solutions.


Gil, Maria. “What would make Australian housing more affordable? Australia’s future housing market reality check.” 

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