Small blocks of land...
I've been reading all the previous posts with much interest. I work for one of the large developers that subdivides these smaller blocks (some larger ones too). From what I've been able to learn, it comes down to a few reasons. Firstly, we keep getting told that land in the Sydney basin will become rare in the next 10 years. Developable land therefore is highly sought after, therefore those selling it sell it to the developers at the highest price. For each block subdivided, the developer needs to make a $50K contribution to the government. This gets added straight onto the price of the land. Then you have the development costs such as roads, sewer, water, electricity, community centres, bike paths, parks, street planting, Council contributions, consultants fees, staff fees and the list goes on.
I hear it from a project managers point of view on a daily basis, but as I am interested in property investment, I understand it from both points of view. And it becomes very simple as well, as the influx of people continues into Sydney, they have to move somewhere and if you can't move out any further, then you must move up...
I have been involved in the project home industry for nearly 20 years now and I have watched the house sizes grow and the Council rules change. It appears that the majority of people nowadays want to build their McMansion. Personally, I don't understand it as my first house and current PPOR is a 2 bed fibro, ex-housing commission house with a granny flat attached. My intention at the time (10 yrs) ago was to get into the market. I grew up in Baulkham Hills but was not able to afford the house prices there at the time as they were double what I was able to borrow.
One thing that does interest me is some first home buyers stating that they can't afford to buy into the market. I've been looking at some open homes in my area and while they are pretty terrible in yield for a IP, they are fantastic for a first home buyer.
You have large blocks of land, 35 mins by freeways to the city, access to lots of large shopping centres and so much more for a minimum price of $270-280K at the moment. As the original poster stated, this is the cost of land in some estates. There is even one house advertised for $250K although I think it would need some painting.
I was looking at a place with a friend the other day who wanted something like her mums house, but she forgets that her mum worked long and hard to get where she is. If she bought approx. 2-3km further away, she could save up to $100K. Of course she would need to do some work on the house (painting and carpet) but for that much saving it's worth it...
But, enough of my rant... I suppose what is good for one, isn't good for others. I like my little "shack" as it does sit on 750sqm and has a huge reserve out the back. I wouldn't swap it for a McMansion anyday