As an architectural technician, I feel I can give you a bit more light on this.

Firstly, this is a very 'open' topic, with alot of variables that would effect the overall costs, depending on typical build costs (Tasmania for instance is dearer to build than say Melbourne or Sydney), and local councils way of doing things re subdividing.

So I will try to be fairly broad with my '$' and just say you'll have to do your homework.

- to get a ballpark figure, builders work on a $ per square metre rate. On average, in todays economic climate you can work on around $1000-1200 per sq/m, inclusive of EVERYTHING, floor coverings, appliances, paint.....the lot. Start with this. Again this fluctuates depending on state and if you are in metro or rural. (What I can advise though is the things that make a house more expensive to build are elevated and off the ground ie NOT concrete slabs, lots of windows, and handrails.)

- also dont always trust the prices shown by builders that mass produce houses, there is always hidden costs.

- you say houses are so pricey in your area, chances are that builders prices to build a new house are also high. Their costs follow the trend and market in particular areas.

- subdividing is a very open thing too. Yes it can be quite cheap to subdivide ($20000 mark) but this can depend upon local councils. Some councils do not like small subdivisions like you are suggesting, as they want developers to subdivide large parcels of land, because councils get certain monetary handouts when they approve subdivisions. This is quite legal, its just how it works. Developers want to subdivide land because they make loads of money, and councils only feel it is fair to receive their piece of the pie. A friend of mine wished to make a seperate title from his parents farm, and the counci charged him $60000!!! Again, do your research.

- another factor in subdividing (as someone suggested) is distance from existing water and sewerage mains, because if new piping needs to be put in, then the costs go way up. Same with power.

- also if you were thinking of doing something with say, 3 or 4 friends (ie building 3 or 4 houses) then council may want you to put in some form of road network, and this is very pricey. This obviously would be dependant on shape of site and location to existing roads, but councils can be very anal when it comes to town planning, believe me. They are not interested in people making gravel driveways etc, (again this depends where land is located ie rural or residential) and also depends of councils town plan.

- having 2 seperate buildings that people live in permantly is not permitted by the Building Code of Australia, only if the are deemed as units, and then that is another thing, which then involves development approvals from local councils which need to be drawn up , different type of construction etc etc (what I do as part of my job), and this all cost a decent amount of money.

- you mention getting a decent block and knocking down the existing house. This isnt as cheap as it sounds. You have councils fees for demolition (not too pricey), paying a demolition man to do it (its illegal to have a go yourself unless licenced), costs to remove the demolished material, if it is an older house extra cost to remove and dump asbestos. Demoltion can be quite pricey and not as clean cut as it sounds.

so yeah, a little bit of my thoughts/knowledge of it all from my experience

But, like I said at the start, there are soooo many variables to this topic, and just do your research, talk to local councils about subdividing of smallish blocks etc.

Hope this helps some! Any other queries just ask!