The Aussie backyard – once a distinguishing feature of the country’s enviable livability – is shrinking as developers tackle declining housing affordability by reducing lot sizes and introducing medium-density housing to their outer suburban residential communities.
The latest UDIA-sponsored State of the Land Report reveals that while the national supply of lots rose to a new high of 57,000 in 2016 and sales hit a record 53,000, supply barely matched demand in Sydney and Melbourne, sending median lot prices surging 10 per cent over the year to $287,000.
At the same time median lot sizes fell more than 10 per cent in Sydney to 396 square metres (they were over 500sq m in 2012), and by 5 per cent in Melbourne.
In Western Sydney, Stockland is offering lots as small as 250sq m and three-bedroom house and land packages at around $640,000 while another ASX-listed developer, Cedar Woods, has introduced apartments to its Melbourne communities.
According to the report, based on the National Land Survey Program conducted by Charter Keck Cramer and Research4, almost 40,000 lots are needed on the eastern seaboard to bridge the gap between the land supplied over the past five years and housing needed to match population growth and planning targets.
“Sydney, Melbourne and Brisbane need to increase supply, in accessible locations, and governments need to reduce the imposts and taxes being applied to new housing, to allow the new supply to be viably delivered at an affordable price,” said UDIA president Michael Corcoran.
It was a different story in Perth, where lot prices fell sharply last year as supply exceeded demand with Adelaide and Darwin’s land markets also subdued.
Mr Corcoran said shrinking lot sizes reflected rising land prices and increased taxes and charges placed on developers, forcing them to innovate and create more self-sustaining and denser communities.
“Density delivers a better-connected community and better affordability. Australian cities have the lowest density in the world among first-world cities,” he said.
In Sydney, the median lot price fell slightly to $465,000 despite supply rising 30 per cent to almost 11,000 lots in 2016. However, prices rose sharply on a per sq m basis. A 508sq m Sydney lot – the median size in 2012 – would have cost $585,000 in 2016 compared with $295,000 four years ago.
A spokesman for planning authority the Greater Sydney Commission said Sydney would need at least an extra 725,000 homes by 2036.
“The GSC is looking at a number of ways to increase Sydney’s housing supply which includes urban renewal, medium-density infill development as well as new communities in land-release areas,” the spokesman said.
“The commission wants to see a city with a greater range of housing choice and diversity and we’re setting targets to drive this.”
Charter Keck Cramer director Robert Papaleo told TheAustralian Financial Review high land prices in Sydney were a factor in developers releasing half as many lots than in Melbourne.
“Availability of supply is going to be reflective of the capacity of purchasers to access that supply at the available price point,” Mr Papaleo said.
Written by Larry Schiesinger