The Diocese has filed a $2.345 million development application with Wagga City Council for a new subdivision west of Lingiari Drive that spans south-west along the Wiradjuri Walking Track to Watson Boulevard.

The Diocese's director of properties Peter Fitzpatrick told The Daily Advertiser that the subdivision was designed to create residential lots that would be offered for sale in the future.

"The diocese is a land developer in the city and this is part of its business," he said.

"We do residential development, we just do the land development side of things and sell the blocks on the open market once we have got the development done.

"We are currently doing stage one there, it's under construction, it's a 50-lot development, and then it's good to be ready with stage two once the market demands it."

"We put in development applications early so we can get our consent early and get all our ducks in a row."

Mr Fitzpatrick agreed the the development application was aimed at allowing the Diocese to use its real estate assets to support itself financially.

Wagga independent property valuer Chris Egan said the development would be good for the city, both in terms of land availability and supporting the Diocese's community projects.

"The Catholic Church had developed a lot of infrastructure and public assets that they would not otherwise have been able to develop, based on the profits of their subdivisions," he said.

Mr Egan said more subdivisions were a "positive thing" as you can't have a situation where professionals come to town and have to go a six-month waiting list to start building a house".

"You can't buy a house in this town at the moment, you can't rent one, and you can't buy a block of land," he said.

"That sounds strong but if we want to get this city by 100,000 people by the year 2038 there needs to be massive changes and people do want smaller blocks of land.

"The more land that is subdivided in the city of Wagga, the more choice that people have when they come here and the better the place is."

A statement of environmental effects lodged with the application stated that the subdivision would create allotments ranging in size from 507 to 2553 square metres and the proposal would involve the extension of Preston Crescent, Watson Boulevard and Lingiari Drive.

Mr Egan said it sounded like the development was aiming to cater for the range of demands in Wagga's real estate market as demographics changed and older people wanted smaller blocks.

"You can't just provide one generic-sized block these days. The 2500 square metre block could be a unit site, potentially.

"A lot of people want a unit, they don't want big blocks."

"The site is currently vacant however the proposal would require the removal of vegetation in the form of approximately 64 trees," the application stated.

Mr Fitzpatrick said the diocese planned to sell the nearby 50 lots before offering land from the 67-lot subdivision for sale.

"Stage one will come onto the market probably in two months' time and then stage two will follow on once the demand dictates," he said.

"We have to do a bushfire report, which is underway. we have satisfied the [Indigenous] cultural heritage situation and the archaeologist has been through there."