In yesterday's blog I mentioned the trend of top growth suburbs often falling within city areas. An effect of this is an increasingly tight supply of inner city land, and average land areas close to our nation's capital cities are getting smaller and smaller. According to recent information supplied by RP Data, changing lifestyle preferences and affordability are also driving the change to smaller land areas.
These types of changes obviously have a direct impact on the real estate market, as more and more people choose to live in detached homes that require less maintenance this is what buyers start to demand. As a result, developers are producing smaller lot housing in an attempt to provide more affordable housing alternatives.
One of the most interesting trends to come from the recent HIA-RP Data Residential Land Report is how inherently small lots are found within the inner city capital city areas, particular Sydney. Of the 20 Local Government Area's (LGA's) across Australia with the smallest average lot sizes, Greater Sydney accounts for 13 entries and all of the 20 LGA's listed are located within a 20 kilometre radius of the relevant CBD.
The City of Sydney LGA has the smallest average lot size for houses throughout the country at 135.9sqm. Coming in second on the list was the Melbourne LGA. The abundance of small lots within these inner city areas highlights the strong demand for housing in these two cities in particular. Interestingly, all of the LGA's listed, except for Auburn in NSW, have a current median house price above the respective capital city median house value and all are considered to be long established inner city residential areas. The ongoing densification in these inner city areas is likely to shrink average lot sizes further as people become more willing to sacrifice space for location.
Also interesting to note is that Queensland, Northern Territory, ACT and Tasmania had no entries on the list of the 20 LGA's with the smallest average lot size during 2008. As I always say, real estate is a highly personal business and personal preference will dictate whether or not the market will continue to demand inner city living as a priority, even if a sacrifice of space is required. That said, maybe moving further out for more room is the next trend we'll see – I did recently cite that regional markets shouldn't be overlooked and one thing many regional centres definitely offer is room to move!