3 minute read
Dwelling value vs land value – what’s the difference?
Has land value increased at the same pace as dwelling value? Or are we simply paying a higher proportion towards building costs?
Talk of property prices rising or falling, dominates conversations, whether it’s backyard barbecues or boardrooms. Most discussions typically focus on dwelling values, which is logical as people are looking for a place to live. But as dwelling styles evolve over time, what impact does it have on land value?
In this story we delve a bit deeper- into changes in land value over recent years. We look at more than vacant land sales. We include land area of reported residential sales for this analysis.
Over the past two years, regional Victoria has consistently outperformed metro Melbourne. This is evident in land values, too. While price per square metre for a home in metro Melbourne remained stable in 2022, (slight decrease of 0.6 per cent to $1,923 from $1,935 in 2021), land value for homes in regional Victoria increased by 9.7 per cent to $817 from $744 in the previous year.
Metro Melbourne recorded some variation depending on proximity to the CBD. Values in inner and middle ring suburbs depreciated by 2.9 and 2.5 per cent respectively and increased in outer suburbs by 6.9 per cent over 2022.
As the population grows, size of a dwelling tends to reduce however, data shows that the median land size for properties within inner ring suburbs grew in 2022 by 1.1 per cent, while middle and outer Melbourne saw a decline of 0.2 and 3.0 per cent respectively.
Suburbs located in the City of Boroondara and Stonnington often dominate the most expensive suburbs list based on their median house prices, followed by Mornington Peninsula in recent years.
However, when you look at land value per square metre, those suburbs in close proximity to CBD are the big earners. For example, Toorak is regularly recorded as the most expensive suburb in Victoria based on house prices but takes 11th place when it comes to land value.
Albert Park from Port Phillip has the most expensive land with a median of $14,583 per square metre, followed closely by East Melbourne ($13,415) and Middle Park ($13,316). Toorak sits in 11th place with $9,460.
Suburbs from Nillumbik Shire recorded the most affordable median prices in metro Melbourne, led by Kinglake West – the only suburb with median land price below $100 per square metre, a price that will only get you 1/155 for the same space in Albert Park. Land in Cardinia and Yarra Ranges is more affordable in suburbs such as Beaconsfield Upper ($245) and Kallista ($355).
Regional towns remain more affordable compared to their metro counterparts. Scarsdale and Lockwood South are the most affordable towns based on their median price per square metre with $33 – you have to pay 117 times more in Geelong for a property with similar size. Suburbs from Greater Geelong and surrounding areas have the highest land price per square metre, led by Geelong itself with $3,885.
Golden Plains and Greater Bendigo dominate the top 10 list for most affordable regional homes. Not everything is focused on the western side as Hazelwood North also features with median price of $43 per square metre.