Australia is one of the largest countries in the world and it is also one of the most sparsely populated, ranking behind countries such as Namibia, Greenland and Mongolia. Almost 90% of Australia’s population choose to live in urban areas leaving a vast unpopulated central region. Despite this, Australia’s cities are some of the least dense in the world.

Examining all 1,022 global cities with a population of more than 500,000, Sydney ranks at number 914 in terms of density with other Australian cities even lower on the list. So what are the reasons for this and are there changes occurring that may lead to future densification?

Chart 1: Selected global cities population densitySource: Demographia

Urban sprawl has been a long-term trend in Australian cities: as the population has grown, so too has the size of the cities. The Australian dream of owning a quarter-acre house and land block has ensured that cities keep expanding. However, there are now several factors that may mean this trend is slowing and new trends are emerging.

Sydney, for example, is now geographically constrained by mountains, national parks and the sea. The main growth corridor is out to the West and even expansion in that direction is now difficult. Median lot sizes have been trending down over the past few years as affordability and planning encourages smaller sites. Similar trends are being experienced across other Australian cities.

Planning regulations have a significant impact on what will be built and where. Each city has an urban growth boundary which is designed to limit urban sprawl, although this can sometimes be flexed. Planning also encourages high density dwellings in the central areas. Looking at population growth over the past 25 years, growth has occurred in the inner city areas and at the edges of cities while the middle ring has only experienced moderate growth. How planning legislation evolves will be a large contributing factor to where growth occurs in the future.

Additionally, there is a cultural shift. Australia is a country whose strong economic growth has been supported and driven by population growth and immigration. In fact, one in four Australians was born overseas. Much of this immigration has come from Asian countries where high density dwelling is the norm.

Combined, these factors are leading to the densification of our cities. High density dwellings have become an increasingly important part of Australian inner cities. Apartments now account for 35% of all dwelling approvals, up from just 16% in 2000. This is a trend that is only likely to increase.

Other factors are now coming into play that will have a significant impact on what Australia’s cities will look like in the future, such as driverless cars and changing workplace dynamics. Transport and social infrastructure will also need to be improved to continue to deal with an increasing and denser population. Cities are an ever-changing landscape and the real estate they demand continues to change along with them.

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