Community groups and MPs are demanding answers from the Victorian government after it sold a 2.6 hectare (6.4 acre) site containing a former psychiatric hospital for just $38 per sq metre, so it can be renovated on the next series of The Block.

It was revealed this week the government had sold the historic Sunbury property to Channel Nine for $1m – the cheapest purchase in the reality show’s history. Three of it’s buildings will reportedly be converted into five homes by the program’s contestants.

But MPs have raised concerns about the sale price that one local real estate agent described as “eyebrow-raising”.

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Trent Mason, from Leading Real Estate, said having the home renovation show filmed in Sunbury – about 30km northwest of Melbourne’s CBD – “will bring a lot of positivity and growth” to the area.

“But the price and how it’s all been handled, well, that’s the bit with a question mark over it,” Mason said.

Mason said it was difficult to say what he would have expected the property to fetch due to its heritage listing and deterioration, but the land would be valued much higher than the selling price, based on comparative sales.

For instance, Mason sold a 2,020 sq metre property for about $890,000 in 2024, despite it being nearly 10% of the size of the site bought for The Block. A 2,880 sq metre property recently sold for $3m in Sunbury, he said.

“Hearing about the price, you can’t help but be a little bit concerned about how it was all handled,” he said.

The sale has caused division in the community, with Legalise Cannabis MP David Ettershank, whose upper house region includes the property, describing the deal as the “bargain of the year” for Nine.

“Well done to the production company behind The Block for securing what has to be one of Victoria’s property deals of the year,” Ettershank said.

“At around $38 a sq metre, I suspect there are plenty of people in Melbourne’s west wondering where they can sign up for the same deal.”

Alison Cunningham, a co-founder of Sunbury Asylum Alliance, said the community was hoping to turn the building into a cultural hub for arts, training, events and hospitality venues – similar to how the Abbotsford Convent is used in the inner city.

“We totally understand these are historic buildings,” Cunningham said. “They are very expensive to maintain. They are very expensive to restore.

“But when the government took over, a lot of those buildings were nowhere near the condition they are now. It’s mainly because nothing has been done.”

She said the price of the contract had shocked people in the area, who were angry it was sold so cheaply.

“What does this mean that they’ve only paid a million dollars? On a broader scale, is everyone’s house overvalued?”

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A Victorian government spokesperson said the property was sold at market value and its price was determined by independent valuers and certified by the state’s valuer general.

“These spectacular heritage buildings are part of Victoria’s history, and this sale will mean they continue to play a part for years to come,” the spokesperson said.

The deal is meant to include an intention from Nine Entertainment to deliver a separate community project at another part of the site, in addition to what it does for the home renovations.

The Animal Justice Party MP for Northern Victoria, Georgie Purcell, has also raised concerns about stray cats living there that could “come under serious threat when production crews start rolling in”.

In September, local MP Josh Bull announced The Block was coming to the area but acknowledged people may be concerned about the site.

“However, as it currently stands, these beautiful buildings are simply destined to deteriorate beyond repair – taking with them the important history and legacy they represent,” he wrote on Facebook.

Ettershank has urged the government to reveal how the $1m figure was reached.

“This is public land with enormous historical significance to Sunbury. The community shouldn’t have to take the government’s word for it that this was the best deal available,” he said.

In 2018, the government took ownership of the former hospital when it bought a larger 33-hectare historic site from Victoria University for about $20m. It promised the site would be returned “to community use” by being turned into a “new village green, arts hub and bustling new neighbourhood”.

Cunningham called on the government to sell the former men’s asylum, which is adjacent to the land sold for The Block, to the community at the same price.

“We are willing to buy it,” she said. “Will they offer the community the opportunity to buy the other side for the same price The Block got it for?”

Data from Cotality suggests the median price of a block of land in the Hume LGA, which includes Sunbury, was $450,000, with the rate/sq metre at $1,145 and the median block size at 349 sq metre. But local median house prices are not directly comparable, because the three heritage buildings on the site need to be restored before renovation can begin.