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Subdivision of property: is it a worthwhile venture?



A key trend that has emerged in recent years is that of subdividing land, especially in Subdividing property - Victoriacertain areas of Victoria.  Many are wondering whether this is actually worthwhile, and whether demand exists for subdivided properties.  Furthermore, those more serious about sub-dividing grapple and try and weigh up the pros and cons of sub-dividing, this article aims to answer some of these burning questions.


Sub-divisions on an upward trajectory

There is definitely a trend towards subdividing in certain areas of Victoria.  According to data gathered by the Department of Planning and Community Development from 2008-2011 Melbourne’s East has led the way in subdividing blocks alongside Greater Geelong and the Mornington Peninsula.

According to The Department’s latest Subdivision of Land (1-9 lots) statistics for the year 2010-2011 show that Manningham experienced the most significant increase in activity followed by  Ballarat at around 33%, Darebin by almost 24%, and Greater Geelong by 14.9%.

This is understandable with many people, such as baby boomers, at the age where they no longer need or want a large back yard but require income.  They recognise the potential they have in their own back yard and this option allows them to remain in the suburb they love with less maintenance to worry about.  If done correctly, the return can be impressive, particularly in view of the fact that the initial investment in comparison to others is relatively conservative.

Sub-dividing as a concept is a good one, but only if people do research and seek advice from a reliable estate agent, particularly if they are building rather than just selling off the block.  Your agent should be able to advise what type of property will sell or rent easily and if you choose not to go that step further and build, whether it is a viable option to sell the land alone.  There are many considerations such as the impact on the value of your current home, parking, separate driveway access, and so on.

 

Is there a demand for this sort of property?

Demand is relevant to the area where you live so again, speaking to a local real estate agent who has knowledge of what people are currently looking for can help you to answer this question.

Personally, I believe there is a growing trend for this sort of accommodation as it is relatively affordable and not everyone is looking for a large home on a sizeable block that requires constant maintenance.  It also provides a cheaper option for people to buy into an area they might otherwise not be able to afford.

 

But what are the pros and cons?

Pro’s

Apart from making property more affordable and making use of current infrastructure it helps reduce the pressure of population growth.

 

What are the disadvantages?

The disadvantages would only be if it were badly planned as far as access, parking and aesthetics go.  Of course particular care needs to be taken in areas of historical significance to preserve ambience and streetscape; but even this is possible if planned correctly in the first place.

Another downside is that subdividing could reduce the value of your property significantly if you have a large home and it turns out that the land surrounding it is no longer in proportion to its size.

 

Does this work in all areas of Melbourne?

Generally this type of property sells well in the eastern suburbs of Melbourne but it could be a totally different story in rural areas and outer suburbs.  It is also important to remember that it may not be possible in your area as it will depend on your local council granting you a Planning Permit.