Australians are scrapping over the last “patches of dirt” left in the inner cities as a chronic undersupply of homes pushes buyers to their limits.
Fresh data from online listings platform Domain reveals a yawning gap between what buyers can afford to pay for freestanding homes and what is available on the market.
In Sydney, Melbourne and Brisbane, buyer searches for houses are $300,000 cheaper than the median listing prices within 10km of the city centre, Domain found in a report released on Wednesday.
“For houses, it really does show that that inner ring is pretty much unattainable for most buyers that are searching in that area,” Domain chief economist Nicola Powell told AAP.
Price gaps for houses narrow substantially the further out buyers look, with the exception of Sydney, where listings are still $150,000 more expensive than searches in the middle ring.
In Melbourne, house listings were $100,000 lower than searches in middle-ring suburbs and $50,000 lower for houses more than 25km from the city centre.
Emma Bloom, a buyers advocate at Morell and Koren in Melbourne, said freestanding houses would always have higher potential for capital growth.
“Freestanding houses are the best investment because God’s not making any more land, so everyone wants their little patch of dirt,” she said.
But as supply dwindles and demand keeps rising, a well-located block of land will become unattainable for most.
“The Australian dream is going to be a balcony with a bit of sunshine rather than a Hills Hoist in the back garden,” she said.
The premium for a house over a unit across the capital cities grew to a record high of $363,000 in October, or 49.9 per cent, found property data firm Cotality.
It’s a substantial increase from five years ago, when houses were just 20 per cent more expensive than units.
Sydney-based buyers agent Chris Clarke says the big burst in prices post-COVID was the “straw that broke the camel’s back” for young people hoping to buy a house in the inner city.
While some buyers moved further afield in search of a patch of land to call their own, others preferred to give up their aspiration for a freestanding home to stay closer to friends, family, jobs and amenities.
“In both scenarios it’s a bitter pill to swallow. You’re sacrificing a house for location or location for a house,” Mr Clarke said.
Unit listings were below or in line with buyer searches throughout the urban gradient in all cities, with the exception of Sydney’s inner ring.
But inner-city apartments were still much more expensive than the cost to build because of restrictive zoning restrictions, Justin Simon, founder of pro-development group Sydney YIMBY said.
“We see in Bondi Public School there are rapidly falling school enrolments, and parents are having to having to crowd fund for an extra teacher to run an enrichment class,” Mr Simon said.
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