It is amazing what you read in the newspapers from academics who have a “solution” to the so-called housing crisis.

 One such “expert” wrote in “The Age” on 6th of May this year that one way to provide more land in the inner suburbs was to sub-divide the “traditional quarter acre block” into two and this will release lots more land for development.

 Now lets see, “quarter acres”.  An acre is 43,560 square feet or near enough to 4,000 square metres.  One quarter of that is 1,000 square metres.  If you can actually find a 1,000 square metre block within an 8 kilometre radius of the city that can be sub-divided, Planning Regulations at most inner city councils demand a minimum size allotment to be 500 square metres.

 So if you are lucky enough to find a block big enough with a house located to allow for a side driveway, fine.  But chances are the house is sited in such a way that a side drive way is impossible.  Therefore you may have to demolish a house in perfectly good order to achieve this academic’s goal. 

 Impractical and uneconomic.

 In most cases the inner suburbs owners are happy with their lot and will not sub-divide.

 Further, how many 1,000 square metre blocks are available in Footscray, Richmond, South Yarra, Elwood, Northcote, etc., etc?  Not many.

 So the academics view is terrific, sounds good, but like so many commentators opinions, not backed up with research.  How about some specifics?

 The phrase “Quarter Acre Block” for the Aussie dream home actually means a block which measures between 560 and 700 square metres.  A bit hard to sub-divide them when Planners have a say!!

This term means two things:

1. The ability of buyers to afford, i.e. the percentage of salary they can afford to pay on a mortgage.

2. With all available resources where can they afford to buy?

No: 1

Is self-explanatory.

No: 2

Lots of buyers say they can’t “afford” a property because they are looking to live close to the CBD or in the area in which they grew up.

To get “into” the market buyers must compromise and broaden their horizons, put up with some inconvenience by living in another suburb they can afford.

For example, look further out.  If buyers are looking to buy in say Glen Waverley, it is very difficult to find a good house under $500,000, yet another 10 minutes along the Monash at say the Hampton Park area there are 72 houses for sale as of 9th July priced between $150,000 and $250,000.  All over the Melbourne metro area there are similar examples.

Buying in a non-preferred area will at least get your equity working and after a reasonably short time something in a preferred area may be “affordable” because your equity base is increasing.  This assumes capital gain which in the short term, one to two years, may not be great because of a quiet period of low activity but history tells us that capital gain in real estate is a given over time.