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 are getting more bang for their buck in outer suburbs or semi-rural and rural suburbs.
Demand for larger homes with more indoor and outdoor space has grown during COVID. Picture: realestate.com.au/buy
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 historical sales of the property itself, sales of similar properties in the area and price trends in the 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.
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.”
The 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.