Hey DWolfe
These are one of the types of properties we're looking at now, and it seems vendors might be just rubbing their hands together selling up, can't be bothered with the process of subdividing and time it will take to get all approvals – slower than snail's pace from what I can understand.
Lots of blocks available with a 3X1 house around the 300-400K mark with 750-900 sq mt block. Assuming council will approve is not worth thinking aboout if this is your strategy.
If you have been quoted $499-520 that's is a lot more than we are looking at, even for 4X2 quite rentable places. And the average house price here is around $400K so it would have to be in a higher suburb than we're looking.
We were looking at Steve's strategy – if you can buy one house for $500K or you can also buy 2 for $250K each – you will be better off with 2.
Some areas are also being flooded by these types of subdivisions too, so take care.
Even some pretty fabulous 1000-2000sqm+ blocks with rentable 3X1 or 4X2 house for 500-600K if anyone is interested. Could put up to 9 blocks/units/houses on the 2000 subdivision. Might claim a spotters fee.  We'd like to be confident enough to do this kind of development but it's too soon for us, but maybe, just maybe if we can raise the finance, could purchase one and sit on it until we ARE confident enough.
Not sure what the building situation is like over here, anyone know what time builders are taking on a house in Perth these days?
We'd be interested in what area it is, now that you've decided to say no.
cheers
D