Perth - Site Prep and Soil Types and Impact Build Costs

Reviewing couple of Development Sites in Perth and in conversations with Builder I was wondering if the Site Soil Classification has much of difference and the ones that I am more keen to understand is the difference between

Class S Soil and Class A. (In areas like Gosnells some of the Soil is classified as S ). Couple of conversations with Builders have expressed significant costs for a 3 Bed 2 Bath 2 car (approx. 20SQ home) on S Class Soil Compared to A Class.

Site Costs are another conversation that usually comes and the retaining walls are somehow added to this setup by default (not sure if this is always necessary on a Class S Soil Type). If the Contour was say fairly flat would that account for 1M or none ? I am getting approx. 6-7K per Metre of Site Prep (for a block size of approx. 800M). Does that sound reasonable?

Is there any other items that we need to review/consider as part of the Site Costs/Build. Areas of interest here is Kelmscott, Maddington, Gosnells, Armadale. Considerations that may add costs before the build of the structures can commence. Could someone please share their thoughts ?

 

What is your end goal here? Do you intend to build and sell for a profit or are you looking to subdivide and sell blocks?

Personally I think that the combination of clay/poor soil and low end values that suburbs like Armadale etc have is a risky proposition.

To give you an example, I was assisting my cousin with her first purchase last year, one site we looked at was on Sevenoaks in Beckenham. Per square metre rate for the site was very attractive, been on and off the market for a while and house had been trashed by squatters.

Beckenham also has much better resale values and significantly higher demand than Armadale etc.

Despite the above, once the soil test report came in(offer was subject to it), we realised it was a potentially 60-80k exercise to fix the soil for this 3 lot 1200 odd sqm site.

I think you'll find that if you have 25k site costs per lot in Armadale, on top of trying to build in the current market with rapidly escalating build prices, that there will be a good chance that you end up with a poor result profit wise.

Of course there are exceptions to every rule, perhaps you build lightweight, perhaps you buy a lot with site works already done, perhaps you buy extremely cheap etc, but I would want at least one of these exceptional circumstances to occur if I hoped to make money building homes in your target suburbs.

Perhaps there might be some margin in some of them if you do simple land split and sales

 

Thanks Sanj for your thoughts. You have definitely thrown some good suggestions there.
Initial thinking was to find a site with existing dwelling/structure on it and retain the structure as is and subdivide the land (one site was 800 other one was 1000Sqm lots - yes had 2 sites that I was exploring). So one plan was to subdivide the 800SQM lot with existing structure retained - subdivide the lots into further 2 and either sell the lots - hopefully if there is profits to be made. Alternatively I was looking at feasibility of building on the 2 lots and sell the houses (I believe for such an exercise - I could fit a 3 bed 2 bath 2 car in for the subdivided blocks).

Given the Site Costs/Soil and potential retaining wall etc - it may shrink the margins or potentially erase any gains which is what I am being mindful about.

With Beckenham as being one option - was that driven by better soil type in general or was it based on better demography and appetite for a better product ? Probably worth looking at beckenham a bit closely I guess.

 

Bringing up an old thread as I am having similar challenges and tagging @Westminster @MTR @thatbum who are the dev experts. Considering the highlighted issues, do you usually add a soil test condition even in this market? On an average size villa (let`s say typical 700m2 R60 - 3 villas), what will be the cost increase between soil A, S, M, H1 and H2? I have had a look at the geological maps, beach to Canning Vale should be sand, Canning Vale to Cannington / Armadale transition to clay, West of Cannington / Armadale disaster

 

A typical example here:
https://www.realestate.com.au/property-residential+land-wa-beckenham-203124206

Plenty of developments around, you would expect good soil. Soil test came back with a soil classified as M. Big hit on dev cost?

 

Just means that plenty of people might not have known it was M class or it's impact or had factored it in.
You can see on the sales advert aerial photos that many of the vacant blocks/construction sites have had sand placed on them which is a big clue that the soil is probably clay. A lot of things close to the Canning River and it's tributaries will have clay soil. If I have my spatial directions correct I think it's Swan Alluvial soil there - magenta colour on this map Soils and Landforms of the Perth Area - Western Australia
Personally I just avoid areas that aren't A class as a general rule of thumb as no end product Buyer ever goes "hey I'll pay $25k extra on your villa because the area has clay". Sometimes the market will play nice and the end values might be higher in the general area and people are able to get back that money but often not.

 

Yep the report actually says if you want to change from M to S you need to add 300mm of fill. I guess this will act as a capping layer to reduce the movement from the subgrade (getting technical here).