Greenfield sites are undeveloped land, typically on the outskirts of the metropolitan area that are being rezoned to accommodate the growing demand for housing. ‘Urban sprawl’ refers to the growth and expansion of the boundaries of the metropolitan area.
With a rapidly growing population, the demand for housing is also increasing and so more and more rural and semi rural areas are being rezoned to be developed into housing estates. The type of housing on offer is typically house and land packages and the target market is families.
The term “urban sprawl” is often applied as a criticism. While housing is a basic need and the provision of building blocks is a priority, there is little point to it if the infrastructure, or lack of, makes it impossible to live the life that the residents seek. There must be adequate roads, transport options, schools, child minding facilities, shopping centres, and recreational amenities to name just a few of the essentials.
Land development is a costly business and is a contributor to the inelastic nature of land supply that inhibits the market mechanism – structural impediments that means the price of land rarely goes down!
As the graphic below shows, the boundaries of the Sydney metropolitan area have changed enormously over the years and are still set to in the next decade or more.
Source: City of Cities – A Plan for Sydney’s Future, Department of Planning, 2005.
What it tells us is that what was considered the ‘outskirts’ twenty years ago or less, is now well within the boundaries. Choosing to invest in a greenfield site will typically mean constructing a house and land package.
This option has numerous benefits:
- Land content – land is at a premium and tends to only appreciate over time. In some states and locations, the land content will be the largest proportion of the cost of the package because development is an expensive exercise courtesy of the infrastructure requirements ( roads, water sewerage,electricity connections) and the co-contributions and levies applied by local government bodies.
- Master planned estates– most developments are part of a master planned estate that include the provision of amenities such as schools, childcare, open space, shops and transport routes. Covenants protect the value of each owner’s property by stipulating design features that maintain the overall aesthetic of the estate.
- Stamp duty is levied only on the land content, providing a significant saving on initial purchase costs.
- Tax deductability of the interest during construction provides tax relief sooner rather than later
- Appeal to a family demographic- Families tend to be stable and reliable long term tenants. Once their children are in schools and sporting clubs and have friends in the area, they are less likely to move. This cuts down on vacancy rates and new lease fees.
- Freehold or Torrens Title – the title holder owns the property to the exclusion of all others. You can make changes to the property as you wish (subject to local government authority approval) without consulting or seeking permission from a body corporate.
- No body corporate fees of by-laws – as above, maintenance of the property is the responsibility of the owner. There are no rules to abide by apart from those imposed generally on the community by government zoning restrictions.
Greenfield sites are a response to the demand for housing by “building out” whereas infill sites, “build up” or build more intensely.
An infill development uses obsolete, under-utilized or undeveloped parcels of land in established, urban areas. It may involve renovating, expanding or re-purposing an existing building. knocking down an old house or two and building medium density or high rise properties. Typically the build type will be townhouses or apartments.
The advantages of infill development are:
- A more efficient use of available land. As a medium or high density measure, it provides more housing in areas of higher population density and demand.
- Efficient use of infrastructure – as the infrastructure is already in place (roads, schools, hospitals, etc) more people use them, cutting the per person cost.
- Gives residents proximity to the things that matter to them including jobs and reduced travel time and expenses.
- Less maintenance, body corporate is responsible for external maintenance of the property and its facilities.
- Preservation of open space, environmentally advantageous, reduces our environmental ‘footprint’
- Strong appeal to young professionals who value proximity over space and increasingly, empty-nesters looking to downsize.