Why land is shrinking but houses are not

The size of land for new builds has been falling for a decade, while the size of new houses on that land remains mostly unchanged, new data shows.

Across the five major capitals, land size for newly built homes has shrunk by 13% over the past decade, according to the Australian Bureau of Statistics.

Of all capital cities, Brisbane saw the largest decline, with housing land sizes decreasing by 20% 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.

Brisbane saw the largest decline in housing land sizes. Picture: Getty

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

So why is this happening? There are several key reasons.

The first is the cost of land. With an expanding population, the amount of land we have in suburban areas is becoming more finite. This means that Australians have to pay a premium to buy homes with more land.

For many people this is not possible. With rising mortgage rates and an increase in the cost of living, more Australians are opting to purchase or build houses on smaller blocks of land.

Australians are building on smaller blocks of land. Picture: Getty

The second is the rise of urban infill. This involves repurposing underutilised areas, such as open green-space, of existing suburbs to build additional housing.

As most suburbs undergoing this transformation have infrastructure and transport, shared community spaces and are closer to jobs, land plots in these developments are smaller than what may be offered further out.

The trade off for these developments is more communal areas like parks.

Although land size is shrinking, houses are not. This trend is evident across all the major capital cities according to ABS data on floor area of new house approvals.

Of the capitals, Sydney has the largest new houses followed closely by Melbourne. This is likely due to their high cost of land relative to the other cities, prompting people to build larger homes which may be proportionally cheaper than purchasing larger plots of land.

This data shows that Australians continue to value living spaces, a trend that was apparent before and during the pandemic following lockdowns and the increase in remote working.

As our population grows and land becomes more scarce in metropolitan regions, urban planners will aim to maximise available space.

As a result, backyards for new builds are likely to shrink further over the next decade.