Melb shrinking blocks touch back garden dreams – realestate.com.au

ShrinkFlation has seized Melbourne’s housing growthorridors with buyers who pay more for increasingly smaller blocks to build new houses.

New research shows that home buyers who chase the dream of their own backyard are confronted with the reality that land is shrinking, the prices climb and the suburbs where buyers can still afford a block disappear quickly.

The phenomenon of shrinkage flation came out the most famous when Cadbury dropped the size of the chocolate blocks for dairy milk, without reducing the price.

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Exclusive Oliver Hume research shows that in Melbourne the average block of 400 m² has shrunk in 2020, which today sold for a median $ 319,000 to 361 square meters, now a median price of $ 399,000.

Although Melbourne remains the only capital of the mainland with a relatively healthy stock of vacant land, the opportunity window is narrowing.

The sales volumes increased by nearly 50 percent in June and developers start to settle the stimuli, which indicates that prices could rise again in early 2026.

While blocks less than $ 1000 per square meter are still available in growth areas, those who want to get closer to the city become a grim choice: smaller plots or higher prices.

Cadbury dropped the size of his dairy milk chocolate blocks, while the price continued to rise.

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For buyers from the first house, outskirts such as Truganina and Donnybrook offer less than $ 400,000 of more than $ 400,000, but the closer to the CBD, the scarce and more expensive options become.

Oliver Hume Chief Economist Matt Bell said that shrinking plots and rising prices were a direct consequence of limited land supply, in combination with the long -term focus of local councils on preserving the suburb and heritage instead of giving priority to housing.

“I am an economist, I am not an architect or a planner, but I am absolutely of the opinion that in the past and still many local councils to this day far too much weigh on those elements,” said Mr. Bell.

“Character and heritage and all things like that, that is nice to have if you can deliver the amount of land and homes you need. But if the choice retains the existing character of a suburb or no housing people, I would rather sacrifice part of the character and house people.”

Oliver Hume Chief Economist Matt Bell said that shrinking plots and rising prices were a direct consequence of limited land supply, in combination with the long -term focus of local councils on preserving the suburb and heritage instead of giving priority to housing.

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He said that the great demand and population growth meant that Australians accepted more and more smaller blocks, with builders adapting to deliver better houses on tighter footprints.

“Everyone wants the larger terrain and the larger house, that goes without saying,” said Mr. Bell. “But people will now sacrifice that because of affordability … Get their first home on that 350 square meter block instead of 500 square meters, because they still have ambitions to upgrade.”

For the time being, the opportunities bags for buyers who are willing to make a compromise to measure or location, but the message is clear: empty land is becoming scarcer and the era of the spacious, affordable block has ended.

TGE Average New Huispartij is approximately 360 m² in Melbourne. Photo: Jake Nowakowski

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The research shows that the median price and the land size have not followed straight lines, with the price that in March $ 409,500 peaks, but the median party size that reached its smallest size at 350 m² in June 2024.

On a dollar per square meter calculation, the land price of Melbourne broke $ 1000 per square meter in June 2022 and did not look back. It was about $ 460 m² in mid -2013.

Bell said that home buyers had to think about transport infrastructure near an affordable block instead of how far it was from the city.

“If I was a buyer, one of the most important elements that make that decision to buy, would not necessarily be the kilometers, but what the transport infrastructure looked like. Whether it had trains or roads or good facilities around it.

“So it doesn’t really matter if it, you know, 30 km or 25 km away from (work), if it means you can save some money on land.”

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