Back then, Riverstone was a mixture of farmland and rugged scrub, and about a day's travel by horse and cart from Sydney.

Now the suburb is booming, and property prices have hit the $1 million mark. But amid the boom, an old subdivision containing hundreds of terrace-sized plots and governed by a paper titling system from the 1880s has gone largely untouched for more than a century.

"It's the land time forgot," said Michael Croghan, a local landowner and the president of a community action group that has been lobbying the government for decades to unlock the land so owners can develop it.

"For many, many years you had these individual lots that were bought by people, sometimes on the promise that things were going to happen soon but they never did."

This is because the original paper subdivision, which dates back to the 1880s when it was carved up to house workers from the nearby Riverstone meatworks, did not account for any of the amenities required by modern subdivisions. While the land has been bought and sold consistently since then, it has never been connected to sewerage, and has limited access to water and electricity.

"Because you've got so many individual owners of such small parcels, no one would touch this with a barge pole. No developer," Mr Croghan said. "And this is in an absolutely boom market for property."

But now, after 30 years of a community-led campaign, the state government has stepped in, with Planning Minister Rob Stokes formally signing a subdivision order last week. It follows almost a decade of negotiation with landholders by the government's development arm Urban Growth to formalise proper subdivision plans, which will replace the archaic paper titling system and connect the area to basic amenities.

For Grace Burzese, whose parcel of land she co-owns with her sisters has languished as scrubland for decades, the breakthrough has been a long time in the making.

"We're just thrilled," she said. "Landowners out there have been waiting for this for over 30 years."

Her enthusiasm is shared by the vast majority of landowners, with 80 per cent of individuals who own 90 per cent of the land voting in favour of the Urban Growth proposal at a ballot earlier this year.

It is first time the government has tackled the problem of paper subdivisions, which govern around 12,000 blocks of land across NSW, and it is treading cautiously. It has limited Urban Growth's involvement to a pilot program of a small pocket of the old subdivision, containing about 280 terrace-style plots spread across a handful of streets and owned by 51 separate landowner groups.

Technically, owners have been able to build on their properties since 2010 after years of lobbying saw it successfully rezoned for residential development, but most have been thwarted by a complicated council approvals process.

For many, even accessing sewerage mains required consent from multiple surrounding land owners to run connections through their properties. As such, some owners resorted to building illegal dwellings, living a fringe-like existence where septic tanks were considered a modern convenience.

Because some owners were unable to afford the $150,000 to develop each plot, Urban Growth devised a novel solution, offering them a "land trading" option where they can trade in half of their property in exchange for Urban Growth paying for all development costs.

This deal has been taken up by Sarah Sasic who along with her husband purchased a 2.5-acre block in the pilot area two years ago and are among the few landowners who live on their property.

Under the new subdivision, the Sasics' house will be demolished and their land carved up into 23 individual plots. They will keep ownership of 11 blocks, but forfeit the rest which Urban Growth will sell to cover its costs.

Though they are losing property, Mrs Sasic said it was the best outcome for her family.

"Once it is developed, and the facilities and the road and the infrastructure is here, the value of the property will go up. So even though we've traded, it's still worthwhile.

"We're all really, really happy."