Driveways, electricity substations, tennis courts and other tiny strips of land not normally used for houses have been selling for top prices as Sydney’s residential land shortage continues to bite.
It comes as an alarming report by the Housing Industry Association revealed lots in new Sydney estates have nearly doubled in the past decade while simultaneously shrinking. The average loss in size was equivalent to a typical one-bedroom studio – about 62 sqm.
The price rise on a per sqm basis was higher than the increase in building costs over the same period, turning even leftover over strips of land with minimal scope for building into prized real estate.
Recent sales included a 110 sqm Newtown driveway that changed hands for $1.25m. A similar lot in Balmain sold for $2.08m.
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A 110 sqm Newtown driveway recently sold for $1.25m.
A range of narrow lots with electricity substations in Lane Cove, Longueville and Willoughby sold for $800,000-$1.8m.
Listing agent of the Balmain property David Servi, of Spencer & Servi, said most of the interest was from small developers and people wanting to build their own property. This included the eventual buyer.
“Another block of land sold a few months before that had more difficult access and was only about half the size, I think that was a bit of the appeal,” he said.
Mr Servi said there “wasn’t much to show” prospective buyers.
“They didn’t all come to the open for inspections, because you could kind of inspect the property from the other side of the fence,” he said.
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This Balmain block sold for $2,080,000 in October 2025.
According to Mr Servi, there was a “bit of a premium” due to the “blank canvas” opportunity.
“It is a bit of a premium just because it’s perhaps a little bit easier if you find a vacant block of land,” he said, noting this was more appealing for some buyers than restoring old properties.
KPMG Australia planning and infrastructure economics director Terry Rawnsley said “people are trying to pick every scrap of land they can”.
“You have these driveways, easements or laneways kind of sitting there which people are trying to grab hold of and it’s just kind of reinforcing that there’s a scarcity of developable land in Sydney,” he said.
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A block in Sydney’s Blue Mountains listed with a price guide of $389,000, spans 113 sqm.- just under two cricket pitches side-by-side
An artist impression for a home on the listing for Lot X, 117 Railway Parade, Leura
An artist impression for a home on the listing for Lot X, 117 Railway Parade, Leura
“Also you probably have a whole range of older houses maybe on 800 sqm blocks, which are now being turned into two or three or four townhouses.
“Even though prices have gone up significantly, land parcels are being sliced up smaller and smaller, especially in the northwest and southwest Greenfields. We’ve seen a trend over a long time of every year the blocks get slightly smaller as developers try to keep the cost down.”
KPMG analysis has shown the share of homes within reach for the average first-home buyer has significantly declined, with one-third of prospective buyers now priced out of the market.
Mr Rawnsley said the data looked at the value of the new properties coming onto the market over the last five or six years.
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Narrow parcels carrying live electricity substations are being pitched as prime land Lot A, Lees Avenue, Croydon Park
Blocks with live electricity substations are currently on the market such as 3 Parsons Avenue, Strathfield
“What we’ve seen is that five years ago, there was still a fair whack of properties in that sort of six, seven hundred to $800,000 price point, which meant your service workers, teachers and nurses, could afford to live and rent in those,” he said.
“They might have been your three or four bedroom homes in the Greenfields or it might have been a two-bedroom apartment in Parramatta.”
Mr Rawnsley said there has since been a “big supply chain shock” coming out of Covid. “Construction prices are up sort of 40 or 50 per cent and that’s meant the developers haven’t been able to provide that same affordable stock,” he said.
“They’ve moved more to the $1m plus mark or moved to the more luxury end of the market, which sort of means that people are more average incomes, just don’t have a chance to kind of get into the housing market in Sydney.”
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Substation sites in Lane Cove, Longueville, Willoughby last year sold under the hammer between $800,000 up to circa $1.8m each
Mr Rawnsley added there was particular impact on younger people being priced out of the Sydney market.
“Sydney’s losing a lot of younger people to other states or even people moving to the Hunter or Wollongong looking for that affordable housing or even heading to places like Wagga,” he said.
“You can see this as having a real impact on the number of people who can choose to live in Sydney.”
According to the latest Housing Industry Association’s Residential Land Report, Sydney blocks have shrunk by an average of 62 sqm since 2015 and the price per square metre has doubled.
The amount lost in average block size is roughly the living space of an average one-bedroom apartment or about a quarter of a doubles tennis court, with land per sqm more than doubled since 2015, rising from $1,000 to $2,019.
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The median lot size across Australia’s capitals has shrunk almost everywhere over the last decade. Source: HIA Residential Land Report
In a media release, HIA Chief Economist Tim Reardon said over the last 25 years the price of the typical new residential lot of land has risen more than three times faster than construction costs.
“Since 2000, residential land prices have increased by more than 500 per cent,” he said.
“Over the same period, construction costs and the price of skilled labour increased by around 150 per cent.”
Mr Reardon said the long-run escalation in housing costs has been driven overwhelmingly by land.
“The way governments release, service and tax land has embedded the cost of infrastructure, delays and planning decisions into land prices,” he said.
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Median Lot Prices for land in new estates across all capitals has risen. Source: HIA Residential Land Report
The latest HIA-Cotality Residential Land Report revealed the median price of residential land rose again in the September quarter, reaching a new record high nationally, up more than 10 per cent over the year and growing at around three times the pace of consumer price inflation.
“Without a healthy pipeline of shovel-ready land across Australia’s capitals and regions, along with all the associated infrastructure, fairly funded, the return of demand for new housing will be diverted into the established housing market, further driving up prices and worsening the affordability crisis,” Mr Reardon said.
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