Subdivision hotspots set to roar as the latest target for homebuyers

First-home buyers armed with tiny deposits are set to flood Australia's growth corridors, but experts fear we're creating tomorrow's planning disasters.

Densely packed homes in The Ponds in Sydney. Picture: iStock

The government’s boosted incentive for homebuyers is unleashing a wave of new property buyers, turning the nation’s fastest-growing housing corridors and subdivision hotspots into magnets for pent-up demand.

The expanded scheme, which came into effect last week, allows first-home buyers of all income levels to purchase a property with as little as a 5 per cent deposit without paying costly lenders mortgage insurance. The policy is designed to dramatically expand the number of eligible buyers, who are currently grappling with cost-of-living pressures and increasingly unaffordable housing.

For buyers of new homes, the most accessible path to homeownership will likely be in the city suburbs and regional towns that are currently undergoing extensive rezoning and backyard subdivisions, all to cater for and cash in on the need for higher density.

Many city suburbs and regional towns are emerging as subdivision hotspots as local governments release plans to guide future land use.

In Queensland, the Gold Coast, Brisbane, the Sunshine Coast and many regions in between such as Logan, and Moreton Bay are experiencing significant population growth and major infrastructure spending, with local councils actively planning for higher density.

Brisbane in particularly recently announced its “More Homes, Sooner” plan, which includes a significant review of the low-medium density residential zones.

Proposals include increasing building height limits from two-three storeys up to five storeys and reducing minimum lot sizes for potential subdivision from 400sq m to 300sq m.

In NSW, areas around the new Western Sydney Airport are undergoing rezoning and subdivision in response to significant housing demand.

Key regional centres like Cessnock in the Hunter Valley are also in demand and the local council is under pressure to consider rezoning land to accommodate more housing options.

In Victoria, one hotspot is Geelong, with various plans either in place or being proposed to allow for land subdivisions and rezoning to accommodate increased population growth.

While densification is necessary, Australian Housing and Urban Research Institute (AHURI) expert Michael Fotheringham warns there’s increasing risk that we are building the wrong type of housing.

He cites the “sea of black roofs and not a tree to be found” at The Ponds, a suburb about 40km west-northwest of Sydney CBD, as a prime example of what modern, poorly planned Australian housing looks like. Homes sit on smaller blocks, around 300sq m, and are mostly four-bedroom houses that stretch close to the boundary line.

A ‘sea of black roofs and not a tree to be found’ on the streets of The Ponds. Picture: iStock

The core of the problem, he argues, is a “weird mismatch” between our housing supply and our population.

“More than half of Australian households are either one or two-person households,” Mr Fotheringham said. “We just keep building three-bedroom households out on the urban fringes when more than half our households are one or two people.”

From an investor’s perspective, local councils updating planning rules will not only help housing demand but create clear opportunities.

Property coach Adam Leach of LandED said the success of land subdivisions depends on existing zoning controls, population growth, major infrastructure projects, job opportunities, and access to lifestyle amenities such as schools, hospitals and universities.

“My preference is to develop in regional areas where there is less competition for development land and the land values are cheaper,” he said.

“The trick is to identify which regional areas to go to. I find generally that coastal regional always have regional demand, but there are some terrific inland towns also.”

His advice to anyone buying property is to find something with a “twist” where value can be added.

“This may include buying a bigger parcel of land with subdivision potential to subdivide one day,” he said. “This may help pay off a big portion of your loan very quickly.”

While the strategy has been successful for many investors, critics warn that without the right kind of planning, the current boom could have long-term negative consequences.

Mr Fotheringham said allowing for more well-planned, medium-density projects is critical to fixing a broken national housing model. He cautions that the current trajectory risks creating a deep social divide.

“We are at a junction where society is splitting into those who own property and those who don’t,” he said. “Those who own property become the landed gentry. We’re reinventing a class system through property ownership.”