House demolitions are an important source of supply for Melbourne’s established suburbs, providing land for infill development of medium density dwellings. Many demolitions will also be ‘knock downs’ where a single house is demolished to be replaced with another single house.
Over the past decade (since 2017 when demolitions data was first collected by the ABS), an average of just under 6,300 houses have been demolished annually, ranging from a high of 7,395 in 2021/22, to a low of 5,396 in 2023/24, and ended 2025/26 at around the decade average, at 6,165.
Melbourne’s Middle Ring suburbs have by far the highest level of house demolitions, accounting for around 70% of the Melbourne total (4,253 per annum over the past decade), followed by the Outer Ring (but inside the Growth Areas).
Monash Local Government Area (LGS) draws the most house demolitions (638 per annum in the past five years), followed by Boroondara (443 p.a.) and Whitehorse (442.p.a.). These areas have suburbs with large lot sizes and values that can support redevelopment. Mornington Peninsula (338 p.a.) is the only LGA with a similar level of house demolitions to the higher-performing Middle Ring regions, followed by Merri-bek (335 p.a.) and Moonee Valley (327 p.a.). Stonington (120 p.a.) attracted the most house demolitions in Inner Melbourne, while Casey (172 p.a.) has the most in the Growth Areas.
Availability of land for infill replacement will be governed by the rate at which houses with potential for redevelopment come to the market. Across Greater Melbourne, house demolitions are equivalent to nearly 10%, or one in ten, of houses sold, typically to be replaced by a new house or a townhouse/apartment development. This share has been relatively consistent throughout the past decade. Significantly, demolitions in the Middle Ring are equivalent to nearly one in four (24%) house sales. While this percentage has been relatively stable over time, there has been a steady reduction in house sale volumes in the Middle Ring, thereby potentially reducing the rate of supply of sites.
As redevelopment of house sites continues, the detached housing stock in various areas will progressively decrease, further reducing the availability of developable sites. This is already the case in pockets of many suburbs, where more than half of the existing housing stock has been redeveloped.
The optimal development yield on a demolished house site will vary with location, prices, site size and orientation, etc. Within Middle and Outer Ring regions, where the majority of house demolition activity takes place, on average there have been 2.5 and 3.4 dwellings respectively per house demolition over the past five years. While some dwellings will have been built on infill sites that haven’t involved a demolition, such as on rezoned industrial sites, these figures nevertheless provides a useful indicator of yield on demolished dwellings.
Moreover, after subtracting the demolished house, the net increase is an average of only 1.5 and 2.4 dwellings per demolition respectively. At the lower end, this is likely to reflect a greater proportion of ‘one for one’ replacements, whereas the higher rate of replacement indicates more multi-dwelling townhouses being built on sites.
The lowest net additions (and therefore likely highest rate of ‘one for one’ replacements) were in Boroondara, at 1.3 dwellings per demolition. Generally speaking, higher yields have been generated in the Outer Established Regions relative to Middle Melbourne, with the highest being 6.7 in Yarra Ranges, although the more likely availability of vacant development sites in the Outer Ring will have boosted the calculation of the dwelling yield
Based on current replacement rates, infill development on existing housing footprints accounts for around 10,000 net additional dwellings per year. While meaningful, it is less than half the contribution of the Growth Area LGAs. Higher density apartments have been slated to do the heavy lifting in re-directing house demand from the Growth Areas to Established Melbourne, but do not necessarily offer a substitutable product like replacement houses and townhouses do.
Lifting infill replacement dwelling activity to more readily replace Growth Area housing will require both more sites to be recycled and at higher densities, while at the same time maintaining the amenity that purchasers of this type of product desire. This represents one of the central challenges in reconciling Melbourne’s infill housing objectives with the type of housing that is being demanded by the market.
For more insight into housing market trends and what it means for your development or your business, contact Angie Zigomanis at [email protected] or Rob Burgess at [email protected]
