How backyard sellers are changing the property market

Ryan Evans has been busy since buying a three-bedroom home in Mooroolbark. He’s just one of a growing number of homeowners in the outer east selling off their land to make a profit — but he has some words of warning.

Ryan Evans in the backyard of a property he is subdividing on Manchester Rd, Mooroolbark. Picture Stuart Milligan

Homeowners selling off their backyards are carving a niche in the outer-eastern property market.

Noel Jones Ringwood partner Mike Muncey said the trend was rife in Mooroolbark, Lilydale and Chirnside Park, where landowners were taking advantage of subdivision opportunities under the Yarra Ranges planning scheme.

And he said it wasn’t empty nesters keen to downsize by ditching their garden, but more commonly younger buyers keen to make a profit, help pay off their mortgage and flip the property.

“Older people who have been there a long time are less likely to go through the process — it would make a heap of sense for them to do it but that doesn’t really happen,” he said.

“It’s generally more motivated people who want to get ahead in the market.”

Mr Muncey warned potential subdividers to contact a surveyor and make sure they followed the planning process.

This included finding out how the land was zoned, what could be built on it and the boundary setbacks.

“It’s also important to note if there are any significant trees either on the property or on any neighbouring properties that may affect what you can build there,” he said.

How much is your backyard worth to your family?

Ryan Evans plans to sell a 430sq m lot from his 880sq m block in Mooroolbark.

He bought a three-bedroom home for $696,000 on the site in July 2017 and hoped to make about $300,000 off selling the backyard.

“I saw it as a bit of a profit and a way to help pay off the mortgage on the main house,” Mr Evans, a real estate agent, said.

The experience hasn’t been an easy one.

Mr Evans forked out $25,000 after discovering the property didn’t have stormwater connections and said the whole process was taking longer than expected.

“Before you attempt something like this you really want to look at the costs involved — there are council fees, planning fees, you’ll need connections such as gas, water and electricity,” he said.

But he wasn’t daunted and said he was “tempted to do another one” once this was over.

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Yarra Ranges Council social and economic development director James Collins said the council had received 236 planning applications involving subdivision of land this year.

Of those 207 had been approved and the remainder were still being assessed.

“Council can negotiate Section 173 agreements with an owner of land to set out how the land can be developed,” Mr Collins said.

“This also provides transparency for future landowners about how they can use and develop the site before purchasing.”

The Victorian Property Sales Report for the December 2018 quarter showed the median vacant land price in Lilydale dropped 39 per cent in a year — from $930,000 to $560,000.

In Mooroolbark the median vacant lot price went from $442,000 in to $346,500 during that time.

Mr Muncey said the lower prices could be a reflection of smaller lots up for sale after subdivision.