The cost of space as Aussie buyers crave bigger homes post-COVID

Australians are placing greater value on property size as they crave more space in the wake of the coronavirus pandemic, driving demand for larger homes and bigger blocks. 

Some homebuyers wanting the most space for their money are favouring outer suburbs and regional areas, particularly as the COVID-led lifestyle shift continues. But many others are prepared to pay more if it means getting a bigger home near a capital city centre, according to realestate.com.au economist Paul Ryan. 

“Within cities, we’ve seen the biggest demand push has been for bigger dwellings rather than to be closer to the outskirts,” Mr Ryan said.

“People have wanted more space rather than necessarily wanting to be further away, so people will pay more for more space if it’s closer to the city still.”

A new realestate.com.au analysis – which calculates each suburb’s median estimated price per square metre for houses – shows Australian homebuyers exactly where they will get more bang for their buck and where they’ll pay a pretty penny for a larger block. 

  • Use the interactive below to discover more about the property price per square metre in your suburb. 

Mr Ryan said city buyers were likely to be looking within particular regions of a city and comparing suburbs.

“People are more likely to be pushed towards those suburbs within regions that tend to have larger block sizes and are cheaper per square metre,” he said. “You’re likely to see suburbs experience higher than average price growth.

“If [buyers] value that extra land and that slightly bigger backyard a bit more, that will mean those properties that have that feature will go up in price,” he added.

Sherwood house, Brisbane

Demand for larger homes with more indoor and outdoor space has grown during COVID. Picture: realestate.com.au/buy

While the average Australian home has always been large, the pandemic has increased the importance of a property’s size and driven a desire for more indoor and outdoor space as well as a shift in preferences towards houses and away from apartments.

Searches on realestate.com.au filtered by the number of bedrooms shows an increasing share of buyers are looking for larger homes in capital cities. Bigger homes are also in demand in regional areas, after a COVID-inspired record shift into the regions from capital cities.

More bang for buck in outer suburbs with big blocks

As suburbs closer to a city’s CBD command higher prices, the suburbs offering the cheapest median estimated prices per square metre tend to be further away from the city centre and have bigger blocks.

“If your only desire is the most space for your dollar, you’ll end up on the periphery,” Mr Ryan said.

“There’s a gradual decrease in price for a given unit of land as you move further from the centre of the city, which shows as you get further away land is less valuable and so people can afford larger plots.”

A realestate.com.au analysis of suburbs within 40km of each Australian capital city centre showed outer suburbs or semi-rural and rural suburbs had the cheapest median estimated price per square metre because of their bigger median land sizes.

Suburbs had to have at least 100 high-confidence valuations in both April 2020 and April 2021 to be included in the analysis. A high-confidence valuation is backed up by more data than a standard valuation, including historic sales of the property itself, sales of similar properties in the area and price trends in the suburb.

For Sydney, most of the top 10 suburbs with the cheapest median estimated price per square metre for houses had median plot sizes of at least 20,000sqm.

“They’re very peripheral suburbs and have large recreational blocks,” Mr Ryan said. “They are great options for those who want space but not the upkeep of a hobby-farm sized block.”

Topping the Sydney list was Kentlyn on the south-western outskirts of the Sydney metropolitan area, where homebuyers pay just $85 per square metre given the median plot size of 20,240sqm.

Melbourne’s top 10 cheapest price per square metre list included suburbs in the Dandenong Ranges and Yarra Ranges, both popular with people seeking a tree change not too far from the city.

Eden Park, a rural suburb north of the CBD, topped the Melbourne list with a median estimated price per square metre of $70 for its median plot size of 15,244sqm.

Eden Park Victoria

Outer suburbs have larger block sizes, while land sizes in rural suburbs like Eden Park are bigger again. Picture: realestate.com.au/sold

With its huge 36,794sqm median plot size, the rural area of Kobble Creek came out with the cheapest median estimated price per square metre – just $23 – for Brisbane.

In other capital cities, the suburbs with the cheapest median price per square metre for houses were: Waterloo Corner ($23 per square metre), north of Adelaide; Gidgegannup ($33 per square metre), north of Perth; Lachlan ($21 per square metre), near Hobart; Coombs ($74 per square metre), in the ACT; and the rural area of Berry Springs ($10 per square metre), outside Darwin.

Smaller inner-city blocks the most expensive

Inner-city suburbs with small blocks tend to cost the most per square metre, not necessarily homes in expensive prestige suburbs, according to the analysis. 

“In general, gentrified, inner-city regions that have long histories and small block sizes tend to cost the most per square metre of land,” Mr Ryan said. 

He said the most expensive places in Sydney by cost per square metre had median plot sizes between 100 and 200sqm.

Homebuyers pay a massive $23,240 per square metre for a house in the most expensive suburb on the Sydney list, Paddington, where the median plot size is only 127sqm. In Darlinghurst it costs $19,682 per square metre with a median 105sqm block.

Mr Ryan said they were working-class suburbs when initially developed with small blocks.

“Paddington and Darlinghurst are very gentrified, nice suburbs, but it shows you the influence of the underlying structure of how the city was developed,” he said.

“These formerly working-class suburbs are now very expensive on a per square metre basis.”

Paddington terrace

Paddington in inner-city Sydney has the most expensive price per square metre ($23,240) for houses in any capital city. Picture: realestate.com.au/buy

Plot sizes for houses in Melbourne’s most expensive suburbs per square metre were between 130 and 300sqm, slightly larger than for Sydney.

East Melbourne was the most expensive with a median estimated price of $14,513 per square metre, based on a median plot size of 241sqm.

Second-placed Middle Park ($12,679 per square metre) also had a larger block size than many other suburbs in the top 10 at 228sqm. 

“Their plot sizes, typically around 230sqm, are higher than other suburbs that are expensive per square metre, which speaks to their desirability in terms of location and what homes are available there,” Mr Ryan said.

Like Sydney’s priciest suburbs, Melbourne’s most expensive suburb Toorak did not make it into the top 10 by house price per square metre because of its larger block size, which at 505sqm was more than twice East Melbourne’s plot size.

“While Toorak has very high prices, it also has very large blocks,” Mr Ryan said.

Teneriffe, one of Brisbane’s most expensive suburbs, topped that city’s list with a median estimated house price per square metre of $5196 based on a median plot size of 441sqm.

Teneriffe Brisbane

Teneriffe is Brisbane’s most expensive suburb with a median price per square metre of $5196. Picture: realestate.com.au/buy

The analysis showed Brisbane’s most expensive suburbs by median estimated price per square metre included those with very large blocks of more than 400sqm as well as some with similar plot sizes to inner-Melbourne.

“Location and suburb character is playing a part here,” Mr Ryan said. 

“But prices per square metre are much lower than Sydney and Melbourne both because prices are lower and plot sizes are larger.”

Elsewhere, the most expensive suburb for houses in each city were: East Perth ($4619 per square metre); the suburb of Adelaide ($4970 per square metre); Hobart’s Battery Point ($5185 per square metre); Canberra’s Deakin ($2262 per square metre); and Darwin’s Woolner ($1312 per square metre).

Many of the most expensive suburbs also recorded the biggest growth in price per square metre, in dollar terms, over the past year.

East Melbourne (up $3741 per square metre), East Perth (up $1012), Battery Point (up $945) and Deakin (up $558) topped both lists for their respective cities.

Sydney’s Kirribilli recorded the biggest increase in any city, with its median estimated price per square metre jumping by $5479 to $18,870. Its median plot size is 201sqm.

Mr Ryan said the analysis showed land had appreciated in value over the past year, with prices per square metre increasing by the biggest amount in areas where land was expensive.

Post-COVID buyers ‘want the works’ 

Buyer’s agent and CEO of propertybuyer.com.au Rich Harvey said land size had increased in importance for buyers, who were also looking for much larger internal space post-COVID.

“They’re thinking very much about the land size and the internal space in which they live, because psychologically they want something better for their wellbeing,” he said.

Mr Harvey, whose agency has buyer’s agents in Sydney, Melbourne and Brisbane, said COVID had pushed many buyers to go after their dream home now.

“People are thinking, ‘life’s too short, COVID’s hit, I want to accelerate the dream’, and they want it now,” he said.

Mr Harvey said what buyers wanted depended on their life stage, such as young couples seeking a family home they could grow into with a backyard on a classic quarter-acre block.

“A lot of the upgraders are definitely wanting more space,” he said.

“They want a bigger yard. They want the pool. They want the works.”

Ashburton Melbourne

Many post-COVID buyers want “the works”, including a bigger backyard and a pool. Picture: realestate.com.au/buy

Mr Harvey said COVID had strengthened the preference for larger land sizes and redefined how people used the space in their homes, increasing demand for a decent home office, storage space or more room for children to play or guests to stay.

Rundown properties have been selling for millions of dollars in sought-after suburbs amid a buying frenzy as homes sell at record speed, highlighting that often what buyers really want is the land.

While some of these ‘million-dollar dumps’ will be renovated to create dream homes, other properties attracting record prices or hefty prices per square metre will be knocked down.

Mr Ryan said development potential and planning rules had a big impact on prices per square metre, particularly where there were large blocks that had the potential to be redeveloped into multi-dwellings.

“The increase in prices, because land has increased in value, has made redevelopment profitable for a lot more properties,” he said.

The post The cost of space as Aussie buyers crave bigger homes post-COVID appeared first on realestate.com.au.