Why price per square metre can be misleading

The arithmetic is price divided by area. The meaning lives entirely in which area you used and whether the two properties share a use.

Labelled illustration. Two recorded house sales on the same street. Sale A: $900,000 on a 300 m² parcel. Land rate $3,000/m². Sale B: $1,200,000 on a 800 m² parcel. Land rate $1,500/m².

Sale B looks “cheap per metre”. Sale A looks “expensive per metre”. Both can be ordinary prices for those lot sizes. In most suburban markets the first band of land is worth more per metre than the next. Ranking the houses by land rate would tell you to prefer the large lot and to avoid the small one for a reason that is mostly size.

If Sale A is a new house and Sale B is a tired weatherboard, the land rates also hide the buildings. If you then divide Sale B by a listing “house size” of 180 m² you have switched denominator mid-argument. Write three lines: price, which area, which rate.

• Vacant lots of similar size, same zone, same overlay set, sold recently.
• Apartments of similar internal area in the same building or a neighbouring building of the same class.
• A claimed “development site” ask against recorded site sales, using official parcel area and the same planning controls.
• A rough land-component sense-check, using genuine vacant-land sales nearby, as one input among several. Not as a value.

• Non-linearity. Larger suburban lots usually show a lower land rate. That is size, not a discount.
• Mixed denominators. Listing land size, cadastre area, internal area, gross area and balcony-inclusive area are all quoted as size.
• Building ignored. Two equal lots with a new house and a derelict one produce different land rates that say nothing about the land.
• Zone ignored. The same land rate under a low-density house zone and a mixed-use zone describes two different permissions. Zone names differ by state and territory.
• A suburb “average $/m²”. That figure mixes every error above into one number.

• Ranking houses by land rate and calling the lowest one cheap.
• Using the listing land size rather than the parcel record.
• Comparing a building rate in one suburb with a land rate in another.
• Dividing an ask by floor area you have not seen on a plan.

Districts shows the official parcel area from the cadastre beside the listing land size, and labels each by source. It does not publish a price-per-square-metre figure as a market indicator and does not rank properties by it. The price-explanation check looks at the ask relative to land size only alongside constraints on the lot. That check is a Districts-derived indicator, not a rate to compare across suburbs. Districts does not hold floor area, so it cannot compute a building rate.

Parcel area through the cadastre and the title plan. Floor area through the building plans or the strata plan. For a development-site comparison, confirm that both lots sit under the same zone and overlay controls in that council’s scheme before you divide.