By Herron Todd White
There is an abundance of land available throughout metropolitan Adelaide, particularly at the extremities. Given the metropolitan area is bound by the hills to the east and ocean to the west, the majority of the available land is north and south of the city.
Typically, new developments are centred around existing townships which allows developers to use the already established community services and facilities as a selling point. Townships such as Virginia, Angle Vale and Evanston Gardens to the north and Aldinga Beach, Seaford and Mt Barker to the south or south-east of the city have all been the centre of recent residential expansion. As an example, the areas designated in red in the maps below represent current proposed land divisions surrounding Angle Vale and Mount Barker.
Typically, premiums are paid for vacant allotments in new subdivisions. Allotments are marketed with the developer’s vision with mission statements spruiking new services, facilities and a lifestyle choice. Allotments are priced in line or slightly above the market ceiling for vacant allotments selling outside of the developments. In most cases, values can be supported however there are always a small handful of contracts which fall above what’s considered acceptable in the market.
Throughout the multitude of subdivisions, allotment sizes range between 150 and 1,000 square metres. Whether you are purchasing north or south of the city, land values remain relatively constant. Courtyard allotments range between $70,000 and $110,000 with a ceiling of $250,000 being reached for the traditional quarter acre blocks.
When buying in a subdivision, it’s important to be aware of the development guidelines and resale restrictions. Development guidelines provide details on the styles of dwelling which can be constructed, the building materials which can be used and timelines in which construction must commence and complete. Resale restrictions of vacant land are in place to protect the developers from a purchaser then advertising a vacant allotment for an amount less than the developer’s price point. Typically, allotments are only saleable back to the developer at a discounted value, usually 90 per cent of the original purchase price.
Allotments within these subdivisions are commonly sold as land and build packages. Typical building costs for single level brick veneer construction range between $1,200 and $1,500 per square metre. This rate is considered constant throughout metropolitan subdivisions. Build costs fluctuate with dwelling size, fit out, level of establishment and each individual builder. For a rate at the upper end of the range, a purchaser should expect to have a relatively established build with stone bench tops, floor coverings, air conditioning, driveway, paths, fencing and landscaping.
Combined land and build prices are in most cases supportable by evidence outside of the subdivisions. Issues can arise when the subdivision is the first to occur in a region with no defined market for new builds. Further, purchasers need to be aware of price points within the market they will be building in. This is to ensure that their land and build cost will be acceptable to the broad market once completed. The rule of thumb is don’t build a castle if everyone else is building the servants’ quarters.
Investors and owner-occupiers are active in seeking out land and build packages. In the shortterm, benefits are there for investors seeking tax incentives and rental returns. Prices can remain stagnant for extended periods as the developer controls the supply of available land to the market. Price growth will remain stagnant until the surrounding areas become fully developed, reducing the supply to the market.
The sale of 16 Red Gum Crescent, Mount Barker ($430,000) is a fair representation of what one could expect as a finished product after buying and building in a new subdivision. This is a single level brick veneer dwelling comprising four bedrooms and two bathrooms with a small entertaining area on a 480 square metre allotment.
Looking closer to the CBD, the general starting point for vacant land throughout the inner north, east and south is $1,000 per square metre. This price can jump to $1,500 to $2,000 per square metre within the metro area’s blue ribbon suburbs. Recently 131A Beulah Road, Norwood achieved a sale price of $670,000 which equates to a rate per square metre of $2,042. This is a regular shaped allotment of 328 square metres located a drop punt from The Parade, Norwood.
With beach proximity, ocean views and accessibility to high-quality services and facilities, vacant allotments along Adelaide’s city beaches are in high demand. Allotments with these attributes can achieve rates per square metre in excess of $3,000. The recent sales of 47A Esplanade, Henley Beach South ($1.665 million) and Lot 1 Seaview Road, Tennyson ($1.075 million) are representations of this, achieving rates of $3,183 and $3,237 per square metre respectively.
Within the inner metro areas, builds move away from standard brick veneer construction to the more ostentatious. Build costs can range anywhere from $1,500 to $3,000 per square metre and above. Builds of this nature are typically architecturally designed and include above-average fit outs such as underfloor heating, integrated audio, passenger lifts, swimming pools, outdoor entertaining areas and humidified wine rooms.
So, you bought a block in a blue-ribbon location and built a house with all the mod cons… but what does it look like? The Sale of 46 Wootoona Terrace, St Georges ($1.65 million) might reflect the finished product. This is a modern, two-level dwelling with high-quality fixtures and fittings featuring a passenger lift, home theatre, large outdoor entertaining area and outdoor kitchen.
For those of us who are picky about what they want, a land and build project could be the perfect answer. You can source the perfect block, find the right builder and have the ability to select everything from the colour of the bricks to the type of toilet roll holder. The key word to remember though is project. It’s not as simple as signing a contract today and having a habitable dwelling tomorrow. These things take time and have been the cause of many grey hairs.
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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.