Land price per sqm.

My first question on Property Chat!

I can't get my head around this scenario. If for example you have 2 properties for sale side by side in the same street. Both properties are run down and both dwellings are identical. They both need a lot of work.

Property A land size is 760 sqm and sells for $790K. This makes it $1,039 sqm.

Property B land size is 364sqm. It's not sold yet as auction is still a week away but expected price is $550+K.

Can some one explain this puzzle?? Is it just a demand thing where more people are just interested in property B?

 

Also property B dwelling is much smaller than property A and also requires a lot more work to bring it to liveable standards.

 

well there isn't a direct linear price relationship if that is what you mean? at the eod they are both houses, both separate residences which satisfy the basic requirement of shelter. yes one has some more land which is great but that's just an attribute. the average price per sqm will drop the further you get away from the minimum lot size for that area

 

Is the larger block a splitter? If so, you're buying two blocks. If the houses are both in poor nick deduct $100-150k for each then compare the two.

 

Also there is cost to achieve this smaller block, not really a simple equation

 

This is why developers are producing more little blocks...this is the future...at the same time demand for well designed newer small homes is going through the roof...

 

Yep!
If you look at the difference between Sydney 300,375 and 450 blocks they are the same length of backyard but slightly wider and you can't tell the difference inside the house. You can still get an 18sq house with two living areas and alfresco on a 300sqm block which are great homes. Only difference is a double garage compared to a single but the demand for this product is ridiculous especially in good locations. Gone are the days of people needing and wanting big blocks

 

Great observation...too many people are stuck in the past about big blocks say over 500 sqm...this does not suit our city lifestyles.

Houses on blocks from 200-300 sqm are in demand.....

 

There's just a lack of decent designs available for side by side 3 bed duplexes on 50' wide blocks. To date we have only found one with 3 decent beds and 2 living areas.

 

Thanks for the help guys. Yes the larger block is a splitter.

So on paper the larger blocks do cost more but work out cheaper. Bit like the more you buy the lesser the price if that makes sense.

 

I have heard the same thing a few times recently, I specifically chose my PPOR (3 bed Townhouse, small complex of 8) because the back yard is only 7 X 9 Metres (Even then it was too much for me to commit to mowing so I concreted and stenciled it ). Pergola covers enough of it that the 8 person table is secure from rain. More and more people are moving towards this model of low maintenance.

To the OP, I would be one of the people bidding on the smaller one if it were for my PPOR.

Lifestyles are more about convenience and less about home duty commitment in general these days.

Since moving in (6 years ago) 4 of the 8 townhouses have either paved or concreted and now.

If you ask someone what they would do if they won lotto, the answers these days would be very different too. Olden times would yield an answer of "Buy a mansion somewhere", now many people would maybe move to a "nicer" place but not necessarily a massive place, personally I would find a luxury beach fronting 3 Bedroom apartment somewhere warm and invest the rest to provide a revenue stream for the rest of my life and generations of me to come .

Nothing scares me more lifestyle wise than being tied to a massive property where something always needs to be done.

 

This is spot on...this not only reflects my views but I am also what I am seeing happening a trend which is irreversible....some developers have not caught on...but the big boys have.

The big buys are putting selling small blocks for a premium but they also put in parks and community facilities for convenience for the time poor. People will pay a premium for these estates as a result.

 

IMO it all comes down to the use of the block. Some may just see the extra land as not needed and therefore no need to pay the extra 200k. Others may view various properties based on there potential as an investment or development opportunity. Each buyer will have their own preference and as mentioned comparing the two based on a linear relationship will not work.

 

But what will 2 new builds on 380sqm blocks fetch once you've knocked down the house on the 760sqm block and built them?

 

Have just looked at this scenario and here is a clear example. This dwelling at 65 Cyril Road High Wycombe was initially sold in 2012 for $360k on 838 sqm block Zoned R25.
Sold Price for 65 Cyril Road High Wycombe WA 6057
To get around the CGT they needed to keep the property 1 year before selling.They split the land and front block plus house on 360 sqm block sold for $390k in 2014.
Sold Price for 65 Cyril Road High Wycombe WA 6057
They then construct a 4x2 dwelling on the 64A and its on the market now for $465k.
Thus the block cost nothing and construction is about 220k. Profits $240k
65A Cyril Avenue High Wycombe WA 6057 - House for Sale #120714801 - realestate.com.au
Some developers will flip and some will keep depending on their investment strategy.

 

What I have done is to see at what cost developers advertise there constructions. Get costs from say 10 developers in the area, priced their construction in $/sqm for 3bdr; 4brm; single story and double stories. You will note that some developers cater for upmarket dwellings. There are many other costs also to consider: architect/consultants, financing costs, civil works, sales costs etc.
Will rather start a new thread because I also have other related questions

 

Add 25k for costs to strata and need to include holding costs for the build, 15k? This works well with corner lots

You can also do this and not build and sell 2 parcels of land, works well in tightly held areas