What drives some suburbs to see more homes knocked down? In most areas, the main driver is people wanting nicer homes. In these suburbs, the blocks are large, the areas have become more desirable over time and the homes may be rundown or of a type that is no longer so popular. Increasingly however, homes are being knocked down to develop higher densities. Increasing housing supply is the best way to improve affordability and this push to higher density in established suburbs will play a greater role in reshaping Australia’s suburbs over the next five years. Regardless of the reason, at a suburb level, higher levels of knockdowns generally leads to higher levels of price growth.

Methodology

This analysis combines data from the Australian Bureau of Statistics on building approvals for demolitions between 2019 and 2024, along with property price data from Neoval tracking five-year growth periods ending April 2025. The research examines demolition patterns at both city-wide and Statistical Area Level 2 (SA2) geographic divisions to identify local trends. Properties were classified as knockdowns where approval was granted for demolition of an existing dwelling. The correlation between knockdown activity and price growth was assessed using scatter plot analysis to determine whether areas with higher demolition rates experienced stronger price appreciation.

Melbourne leads the knockdown revolution

Melbourne tops the list with 34,490 houses approved for demolition between 2019 and 2024, narrowly surpassing Sydney's 32,578. The scale drops significantly for other capitals, with Brisbane recording 11,135 knockdowns, Perth 9,327, and Adelaide 5,316. Smaller capitals show considerably fewer demolitions, with Canberra at 1,769, Hobart at just 498, and Darwin trailing with only 175 homes removed.

Premium suburbs dominating the knockdown trend

The suburbs experiencing the highest rates of knockdowns are predominantly affluent, established areas with significant property value. This is of course not surprising – these locations combine desirable attributes that make them prime candidates for substantial redevelopment.

In Melbourne, Balwyn North and Glen Waverley East represent prestigious eastern suburbs known for excellent schools, spacious blocks, and tree-lined streets. These areas have historically attracted wealthy families willing to pay premium prices for location, with median house prices well above $1.7 million.

Sydney's knockdown hotspots of Ermington-Rydalmere and North Ryde-East Ryde follow a similar pattern – established middle-ring suburbs with strong amenities and transportation links. North Ryde is a suburb that is more consistent with what we will see more of in the future. Homes on large blocks are knocked down and converted to apartments through rezoning. The impact on existing homes however still has the same impact - detached houses have seen their values soar due to increasing scarcity. This reduction in detached housing stock has kept house prices elevated despite the overall increase in dwelling numbers.

Perth's leading knockdown areas of Riverton-Shelley-Rossmoyne and Nedlands-Dalkeith-Crawley represent some of the city's most expensive real estate. Nedlands-Dalkeith in particular ranks among Perth's wealthiest areas, with riverside locations and proximity to prestigious schools driving property values well above $2 million.

Economic drivers behind expensive area knockdowns

The concentration of knockdowns in expensive suburbs reflects several economic realities:

1. Land value proposition: In these premium locations, aging homes often represent just 20-30 per cent of the property's total value, with land comprising the remainder. This makes demolition financially viable when the existing structure no longer meets modern expectations.
2. Return on investment: Building a new, larger home in an established premium suburb typically delivers stronger capital growth than similar investment in outer areas with lower price ceilings.
3. "Highest and best use" principle: As land values rise, economic pressure increases to maximise the value of each block through larger, more luxurious dwellings.
4. Demographics and wealth: These suburbs often attract high-income professionals and business owners with the financial capacity to fund substantial rebuilds, further reinforcing the area's exclusivity.

Do knockdowns drive price growth?

Examining the relationship between knockdown activity and price growth reveals some surprising insights. While there is a modest positive correlation between demolitions and five-year price appreciation, the pattern is far from straightforward.

Areas with the highest price growth (around $1.5-1.8 million over five years) typically show moderate levels of knockdown activity rather than the most intense redevelopment. This challenges the assumption that more knockdowns automatically lead to stronger gentrification or price growth.

Suburbs experiencing very high knockdown counts (400-600 demolitions) show varied price performance. Some achieve substantial growth around $500,000-$600,000, but they don't necessarily outperform areas with fewer knockdowns.

The data suggests that while knockdown-rebuilds contribute to neighborhood transformation, they represent just one factor among many influencing property values. Local market dynamics, amenities, location desirability, and broader economic factors all play critical roles in determining price trajectories in Australian suburbs.

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