More property owners are subdividing their land

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The quintessential Aussie backyard—with a spacious lawn for cricket, a swimming pool, and outdoor furniture—may soon be a thing of the past as more and more property owners slice off chunks of their land to capitalise on the growing demand for affordable homes in Melbourne.

Savvy property developers and investors are making sizable profits. One couple pocketed hundreds of thousands of dollars after successfully redeveloping a property at 49 Lawson Street in Highett.

They purchased a three-bedroom house on a corner block for $956,000 in April 2015, sliced off the backyard to build a townhouse, and then sold both properties separately for a combined $1.52 million.

As noted by Paul Bond, director at Hodges Sandringham, demand for land with subdivision potential has increased significantly because “prices have gone skyward in the bayside area; it’s become almost unaffordable for a lot of first home buyers.”

In addition to backyards, property owners are also carving off their front yards and tennis courts. According to Nunzio Sulfaro, real estate agent at Nelson Alexander Greensborough, many property owners are cashing in because they’re asset-rich but cash-flow poor and want to unlock the monetary value of their land.

In the suburb of Frankston North, Eview Group’s Simon King said subdividable properties have sold quickly, achieving an estimated extra $20,000 more than non-subdividable blocks. The majority of subdividable blocks were being carved off in the area, which is a huge contrast from five years ago when the practice was virtually unheard of.

Frankston City Council acting chief executive Dr. Gillian Kay said there were 548 new developments on subdivided blocks in the 2015-2016 financial year; a significant increase from 400 in the 2013-2014 financial year.

While homes built on subdivided land may lack extensive backyards, that doesn’t mean residents can’t enjoy the amenities found in larger properties. Architect Nicholas Murray said property owners with small blocks could take advantage of the “upside down house” concept. In upside down houses, bedrooms are located downstairs, while common areas like kitchens and living rooms are located upstairs.

As residents of subdivided blocks lack space, they could have their swimming pools, backyards, and other outdoor areas built on top of garages. Residents could also have partially enclosed outdoor rooms constructed on top of their homes, enabling them to take full advantage of the limited space. 

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