Vacant Land Risk: How Far Away is Safe Enough?

Why Vacant Land Matters

Jeremy reiterates a core principle: supply is the enemy of capital growth, and vacant land represents the potential for that supply. Using satellite imagery, he contrasts typical new "greenfield" estates (freshly cleared land that can take years, sometimes decades, to fully build out) against well-established suburbs with very little remaining vacant land, and therefore limited scope for oversupply to undermine growth. Despite this being a fairly intuitive principle, Jeremy notes many investors are still drawn into greenfield areas through developer marketing, sometimes reinforced by industry professionals who may be incentivised by commissions, including some who present themselves as independent investment advisors while functioning closer to a developer's interests. Both agree most people in the industry are likely well-meaning rather than deliberately misleading, but that misinformation on this topic remains common.

Critiquing a Flawed Take on Vacant Land

Jeremy shares that he recently reviewed a podcast from someone describing themselves as a "head of research" and self-proclaimed leading market forecaster, who argued that concerns about vacant land are a myth unsupported by data. Jeremy walks through several problems with that person's research:

• Cherry-picked, single-period comparisons: the presenter compared Campbelltown (up 119% over a specific 10-year period to 2023) to Newtown (up 95% over the same period) to suggest an outer, land-supply-heavy suburb had outperformed an inner one. Jeremy notes Sydney overall grew around 136% over that same period, meaning both example suburbs actually underperformed the broader market, undermining the comparison's usefulness.
• A "random" suburb the presenter happened to live in: Glenwood, in Sydney's northwest, was described as a random selection despite the presenter mentioning a personal connection to the suburb. Jeremy notes Glenwood's growth (around 140% over the same 10 years) was roughly in line with Sydney's overall growth, undermining the point being made.
• Comparisons within a single, small significant urban area: in Bendigo, the presenter compared outer suburb Epsom (80% growth) to inner suburb Kennington (71% growth) against Bendigo as a whole. Jeremy notes Bendigo's overall growth was roughly in line with Epsom's, and that Kennington itself actually borders vacant land, undermining its use as a "safe," built-up example, when better-established Bendigo suburbs (such as Bendigo Central, North Bendigo, or Ironbark) were available and not used.
• An extremely small sample size described as "lots of data": Jeremy notes the presenter's analysis was based on roughly half a dozen suburbs viewed over about ten minutes using a CoreLogic app, yet was described as involving "lots of sample sizes," which Jeremy considers a serious misrepresentation of what constitutes a statistically meaningful data set.

Jeremy also raises a possible conflict of interest: the presenter is the founder of a buyer's advocacy business, an industry that (like real estate agents) earns revenue through transaction turnover, meaning clients objecting to a property's proximity to vacant land could reduce that turnover. While he stops short of asserting this was the underlying motivation, he flags it as a factor worth being aware of, while maintaining he believes the more likely explanation is a genuine, if significant, gap in the presenter's understanding of data analysis rather than deliberate manipulation. Jeremy shares that he has personally experienced an estimated million-dollar opportunity cost from following flawed advice of this kind earlier in his own investing journey, when a property he purchased saw no growth for around 15 years.

Jeremy's Research: Dwelling Growth vs. Capital Growth

Jeremy presents his own research, focused specifically on new supply as measured by growth in dwelling counts, since significant increases in dwelling numbers are really only possible where substantial vacant land exists to be developed. He clarifies that having vacant land doesn't guarantee it will be developed, only that the risk exists.

His analysis groups suburb-and-10-year-period combinations into deciles based on dwelling growth over that period, using data spanning from 1990 to the end of 2023 (34 years), capturing every possible 10-year window within that range (not just the most recent decade), resulting in well over a million observations. The results show a clear inverse relationship: suburbs in the lowest dwelling-growth decile saw around 5.5% annual capital growth on average, while suburbs in the highest dwelling-growth decile (associated with dramatic increases in dwelling counts, some over 200%) saw meaningfully lower growth, with the 9th and 10th deciles specifically seeing capital growth below 3%, roughly half the typical 5–6% seen elsewhere. On a $500,000 property, Jeremy notes that gap in growth represents an opportunity cost of around a quarter of a million dollars over 10 years.

Extending the analysis to 15- and 20-year periods, Jeremy found the same inverse relationship held at 15 years, but weakened substantially by the 20-year mark, since greenfield areas eventually become built out and the earlier oversupply effect fades. His overall takeaway is that the negative impact of vacant land is real but front-loaded, concentrated more heavily in the earlier years after a growth corridor opens, before eventually settling as the area matures.

How Far Away Is Safe?

To address how much distance is needed to avoid this risk, Jeremy took the worst-performing decile of suburbs from his dwelling-growth analysis and measured the capital growth of surrounding suburbs at varying distances. The pattern showed clearly lower growth for suburbs just 1 km from a greenfield estate, improving steadily with distance, with growth broadly normalising somewhere around the 8–10 km mark.

Guest Analysis: Luke Metcalfe (Microburbs)

Jeremy brings in Luke Metcalfe, founder of Microburbs, to share independent research on the same topic. Luke's analysis used a database of 58 million property listings, tracking land-only listings (as opposed to dwelling counts) as a proportion of all sales in a suburb, across every possible period from 1990 to 2024, and measuring the effect on capital growth over the following four years specifically (rather than Jeremy's 10-year lens).

Luke's findings: suburbs with negligible land sales (fewer than 1 in 1,000 sales being land-only) saw growth around 1.5% above the national average, while suburbs at the extreme end (at least 1 in 5 sales being land-only) saw growth around 2% below the national average, a roughly 3.5 percentage point swing that compounds meaningfully year over year. Luke also found this effect was often more pronounced when looking at a broader 7 km radius around a suburb, rather than the suburb in isolation, suggesting that widespread land supply across a wider area has a stronger dampening effect on growth than land supply confined to a single suburb. He also noted this pattern was highly consistent for suburbs within roughly 150 km of a capital city (broadly, satellite cities within commuting range), while a modest, steady trickle of new land supply in more remote regional areas didn't show the same negative pattern, and could in some cases reflect positive signs like population growth or improving amenity.

Luke shared several specific suburb examples showing the same inverse pattern: growth in these suburbs declined as the proportion of land sales rose, then began recovering (though sometimes still below the national average) once land sales tapered off, illustrating the lagged nature of the effect.

Guest Analysis: Kent (Suburb Trends)

Jeremy and Damien also bring in Kent from Suburb Trends, who shared analysis based on Statistical Area 3 (SA3) regions rather than individual suburbs, which he finds statistically more stable and less volatile for time-series analysis. Comparing an SA3 encompassing inner Sydney against the Campbelltown SA3 referenced in the original flawed presentation, Kent's data showed a 10-year dollar growth of $885,000 for inner Sydney versus $440,000 for the Campbelltown SA3 (91% versus 116% in percentage terms, illustrating how percentage-based comparisons can be misleading when measured off a lower price base). Kent's Bendigo SA3 figure showed $232,000, or 74% growth, over the same period.

Kent raised a further caution around media "top growth suburb" rankings based on simple percentage sorting, which tend to overrepresent low-base, volatile markets. He shared an example of a suburb north of Newcastle that dominated growth charts for a period, driven by new house-and-land packages selling around $400,000, being compared against much older, poorer-condition housing stock nearby that had previously sold for as little as $50,000–$60,000, a comparison that reflects differences in dwelling quality rather than genuine underlying market growth.

Kent also proposed several practical questions investors should ask a buyers agent before proceeding with a purchase in a land-supply-heavy area: whether a recommended location or property type is being suggested partly because it's easier to source available stock (and therefore easier for the agent to complete a sale); whether the agent receives any rebates or incentives from the developer; and what happens to a market's dynamics once government grants or other artificial demand supports are eventually withdrawn, particularly relevant given how exposed house-and-land estates can be to interest rate rises, given the typically higher loan-to-value ratios and similar borrower profiles common in these areas. He also suggested it can be worth asking local selling agents whether any particular buyers agents have a reputation for paying above market value for properties.

Kent also cautioned against relying on simple median price changes in areas undergoing significant new construction, since a rising median in these cases often just reflects newer, more expensive dwellings entering the sales mix, rather than genuine like-for-like capital growth on existing properties. He noted his own analysis specifically focused on same-property growth to avoid this distortion.

Closing Thoughts

Damien and Jeremy thank both guests for their independent perspectives, noting that despite differing methodologies and time frames, all three analyses (Jeremy's, Luke's, and Kent's) reached a broadly consistent conclusion: proximity to significant new land supply tends to meaningfully hold back capital growth, particularly within commuting distance of capital cities, reinforcing the importance of steering clear of heavy vacant land exposure when selecting an investment property.