There were 76,000 blocks of land sold in Australia during 2021.

For perspective, that was up on the 54,000 sold in 2020, and well up on the 29,000 sold during 2019.

It’s been dubbed the ‘tree change’ effect; people moving from the city to the suburbs in search of more space and lifestyle.

As a result of that tree change demand, in the past 12 months, the median lot size reduced by 2.3 per cent, while the price per square metre paid for a block of land increased by 8.2 per cent across Australia.

In Melbourne, the median lot size is 371sq m, with the median price for a block of land costing $327,000. That works out to be a price per square metre of $881.

Here is the breakdown region by region:

 

Median lot size

Median lot price

$/m2

Sydney

362

 $           544,000

 $    1,503

ACT

493

 $           453,000

 $       919

Melbourne

371

 $           327,000

 $       881

Southeast Qld

401

 $           272,000

 $       678

Perth

375

 $           215,000

 $       573

Adelaide

450

 $           187,000

 $       416

In Bulletproof Investing, I wrote about how the median house price in Melbourne rose from $130,000 in 1989 to $780,000 in 2020, but that those numbers are a little misleading because we aren’t comparing an apple with an apple.

The median house in 1989 most likely sat on top of a 1,000m2 block of land which was 15km to 20km from the Melbourne CBD, which is significant.

In 2019 (the latest data available when I wrote the book), the average size of a block of land dropped to 392sq m about 40km from the Melbourne CBD.

A 1,000sq m block of land within 20km of the city would probably have been worth between $1.2 million and $2 million by the end of 2019 (exactly how much would depend on the infrastructure, zoning and population growth).

In other words, the median house price in Melbourne in 1989 had really increased from $130,000 to at least $1.2 million by 2019.

A good percentage of those original (1989) properties have been subdivided or are now home to townhouses and/or units.

I think we will see the trend of shrinking land size continue for decades.

At the current rate, the median block size in Melbourne will be 295sq m by the end of this decade.

You only have to look at other countries, bigger and more densely populated than Australia, to see what the future holds.

In places like Irvine in California and Frisco in Texas, block sizes less than 100sq m more than 50km from the Los Angeles and Dallas CBDs.

Yet they are affordable, liveable, places to raise a family, as well as being bike and pet friendly. You get the message; places that embody the tree change movement.

Gone are the backyards and dead-space hallways, replaced with communal parks and rooftop alfresco designs that provide an innovative way to use space.

I’ve had the fortune of walking through these cities and the homes located in them. With a little bit of innovation, it doesn’t feel like you’re getting any less house even though you’re on a smaller block of land.

The solution to affordability is density combined with innovation, and there’s plenty of other great examples of that being achieved outside of Australia. It’s only a matter of time before we start to bring those innovations into Australian communities.

For homeowners and investors alike, it’s why the value is – and always will be – in the land.