Does land size matter? RP Data's Melbourne auction preview

The impact of land size on the value of and demand for a property is an interesting question.

Analysis of RP Data information comparing the sale price with the land area shows that location is still more important than size when comparing suburbs.

After all, a block of land that is twice the size and twice the distance from the amenities you desire is not likely to be as appealing as a well-located smaller one.

The value per square metre of houses in Melbourne’s million dollar suburbs demonstrates this.

Toorak is the city’s most expensive suburb for houses with a median sale price over the last year of $2.622 million. The average block size is however quite large at 8,232 square metres which translates to a cost of $3,187 per square metres. Interestingly, this is lower than the $6,274 in Albert Park and $6,074 in Middle Park and the median sale price is less than half that of Toorak

These two neighbouring suburbs have, compared to Toorak, very expensive land but this is more a factor of the small block sizes, at 2,092 square metres and 2,592 sqaure metres respectively.

At the other end of the spectrum is Ivanhoe East, a highly sought after suburb with a median sale price of $1.15 million; it has slightly larger blocks than Toorak at an average of 9692 square metres, again highlighting that location is the most critical factor.

Melbourne Auction Market preview for week ending 13 July

There are 527 auctions scheduled this week in Melbourne compared to 426 for the same time last year.

The Melbourne market has been delivering consistent results for sellers in the past four weeks with very little change in the weekly clearance rate.

A review of the change in house values on a suburban basis shows that the largest increase over the last year was found mainly in inner city suburbs. Middle Park, Hawthorn East, Braybrook, Balwyn North and Praaran comprised the top five with changes in median value of between 43.2% and 24%. For apartments the top five included Caulfield East, Middle Park, Canterbury, Flemington and Spotswood.

The average time on market for houses sold last month rose sharply from 35 to 40 days despite average discounting being stable at -5.3% over the previous week.

Key data

• Clearance rate week ending 6 July: 71.4%
• Melbourne auctions expected week ending 13 July: 527
• Melbourne private sales time on market week ending 6 July: 40 days (houses)
• Melbourne vendor discounting market week ending 6 July: -5.3% (houses)
• Listings being prepared for market are 0.5% lower in month ending 6 July (seasonally adjusted)