In Sydney’s northern suburbs, small blocks of land containing active electrical substations have recently sold for prices up to $1.8 million, highlighting the intense competition for property in Australia’s most expensive housing market. These miniature parcels come with unique challenges for development, as builders and architects must navigate the presence of vital electrical infrastructure while attempting to create habitable spaces.

Simon Harrison, principal at Belle Property and a real estate agent involved in several sales of these sites, shared that “in 25 years, I’ve never sold anything like it in my career.” He reported two such blocks fetching $1.8 million and $1.43 million respectively, both surpassing the median house price in Sydney, which stands at around $1.2 million according to Tim Lawless, research director at Cotality, formerly known as CoreLogic.

Lawless described the sales as “a sad indictment on the availability of strategically located developable land” amid Sydney’s population of 5.5 million. The parcels are often a fraction of the average house site size of 400 square metres. For instance, one 240 square metre block sold for $800,000, while another much smaller 50 square metre site, partially occupied by a power box and a roofless shed overshadowed by a frangipani tree, was listed for $300,000. Harrison characterised this site as “rare and intriguing” and “a unique opportunity.”

The energy company Ausgrid, which owns these parcels, is selling 21 land blocks across Sydney. According to Harrison, buyers include first-home buyers, developers, and neighbours aiming to expand their property sizes. Ausgrid has stated it will maintain access to the electrical infrastructure as necessary but no longer requires ownership of the entire land parcels.

Mosman Council, located on Sydney’s lower north shore where some of these sites are situated, has received numerous enquiries about the substation blocks. A council spokesperson explained that while constructing dwellings on these sites is theoretically possible, the challenges are significant: “The construction of a dwelling house on them is, in theory, possible [but] this may be difficult to achieve due to the constraints of developing a very small site containing an electrical sub-station.” Developers must keep a clear access space of approximately 12 square metres around the substation equipment.

Despite the proximity to substations, Harrison assured potential property purchasers that the sites pose no safety hazards, explaining, “Some substations emit a low hum, but they have no radiation or emissions.”

Local resident Ed Blakely, a former urban planning professor at the University of California and a Mosman resident, reflected on the market dynamics after noticing one site priced at $475,000. He mentioned that his daughter had considered purchasing such a block as an entry point into the housing market, suggesting that “after two years or so, she could borrow against it to buy a house.”

Blakely also noted his neighbours’ hopes that the government might acquire these sites to provide local amenities for new apartment developments, such as electric car charging stations. While such parcels could function as rental studios or short-term rentals like Airbnb, Blakely expressed scepticism about their suitability for permanent residence: “You’d be kicking yourself every day – can you imagine living in a one-room place, your stove in the same place you’re sleeping?”

Over recent decades, the average size of suburban blocks in Australia has decreased, while dwellings themselves have grown larger, according to the Australian Housing and Urban Research Institute (Ahuri). Michael Fotheringham, Ahuri’s managing director, commented that these tiny, constrained properties potentially offer an opportunity to increase housing density. “There is no reason we can’t build smaller homes, townhouses, apartments and so on, in reasonably compact ways,” he said.

However, Fotheringham cautioned that the high price of these unusual vacant or semi-developed lots is a barrier to experimental housing concepts like tiny homes. “It shows how much the cost of land contributes to housing unaffordability, when even such compromised blocks are attracting significant sums of money,” he added.

The Guardian is reporting that these sales of small, substation-containing blocks reflect broader pressures on Sydney’s housing market, where land scarcity and high prices are driving buyers to consider increasingly marginal or unconventional properties.

Source: Noah Wire Services