VIC How to Calculate Price per square metre

Hi guys, I am having a bit of trouble understanding how an investor can calculate average price per square meter in an area.

I want to get an avg price per m2 for each suburb I am looking at and an avg for the North, South, East and West pockets of these suburbs.

The way I see it to do this, I would look at previous sales in the suburb/ pocket. Then divide the sell price by the total land area to get a price per m2 for that property. I would then do this for several properties to get an average.

However, i notice there are significant differences in price depending on the age and quality of the actual dwelling on the lot. This strongly affects my price to land calculations.

Is there a way to work around this to get a more accurate figure? Is there any websites which already have an avg price m2 per suburb??

Any advice would be appreciated.
Thanks heaps.

 

That suggests price per sqm is not a useful guide. Why bother with it at all?

 

Doesn't work that way

 

How does it work then

 

For relatively similar properties, it does provide a good indication of price difference between sections and suburbs.
Just wondering if there is an easier way to find this figure given the fact that finding similar properties sold in the last few months in all pockets of a suburb is unlikely.

 

Very time consuming, and possibly pointless. But the way I'd address this is:

• Work out an average build rate $/sqm
• Multiply the build area by the build rate (adjusting for house size)
• Depreciate the house by 2.5% per year back to the residual land value (adjust for the age of the house)
• Map the $/sqm rate of the residual land value.

But this won't adjust for zoning, busy roads etc.

 

How does the figure help you make better investment decisions, if you are buying land with a house on it and not just land?

 

@Sackie is that you?

 

Add back the value of maintenance or upgrades undertaken (& depreciate accordingly).

 

Hi, I think others have answered.

I shall also add three examples:

- Sometimes one side of the street is zoned R15 but opposite side is R40. The $/sqm would be significantly different. (Perth zoning system)

- Another example is one side of the street is a single "good" school zone but the other side is a dual "good" school zone.

- There is also a street I know which runs through 3 suburbs. Each section of the street is of a different $/sqm although it is not even a km long. It's the postcodes.

 

Go back to the person who told you price per sqm is a valuable metric and ask them how it works?

 

I have done a little bit of research. Typically around 60-70% of the value of a house can be determined by land size, number of bedrooms, bathrooms and car spaces. For apartments, around 75-90% of the value of a property can be determined by the apartment size, number of bedrooms, bathrooms and car spaces. Car spaces not as relevant in regional areas, and bathrooms are typically worth more than bedrooms. I have tried doing a 3-4 point condition assessment (poor, average, good, great) with some success, but it is too variable to generalise into one sentence.

 

Could be a waste of time if its not new???

I would simply look at comps like for like, land component and location. Recent comps

 

If you still want this info it’s published by sqm research under their free info for a suburb. To save you the time to gather it.

As others mentioned - ‘generally’ smaller blocks will have higher $/sqm as subdivided or used for units / apartments or other higher density use.
Larger blocks with less dense usage - ie acreage or blocks unable to be subdivided for whatever reason will have a lower $/sqm.
Good luck