Melbourne and Greater Geelong land supply under pressure

New figures are now available to compare the first quarter’s exponential land sales price growth and sales volumes to what was a turbulent 2020.

Robust demand for land in all municipalities has certainly been of interest with sales volumes continuing to show strength post HomeBuilder.

Red23, specialist sales and marketing partners for land development projects across Victoria, observe the amount of time a block of land is released for sale until it is sold and collate this information for a more accurate account of market performance.

The time a block of land is available on the market indicates the strength of demand in the market, as the length of time becomes shorter, demand for land is at its highest.

Their research shows that in Q1.’21, demand for land was at its peak as land lots were available for under 3.5 months; the shortest period since early 2019 when the time on the market was just 3.6 months. Furthermore, all municipalities had an improvement to the time on the market.

This quarter, the lowest was in Hume, with an average of 2.2 months, Casey at 2.5 months and Melton at 2.7 months.

Greater Geelong also fared well, with land lots spending an average of 2.7 months on the market before being purchased.

Stock availability was also at its lowest due to a clear shortage of land available across Metro Melbourne and Geelong; with many areas having less than two months’ worth of stock to sell.

All municipalities except for Melton and Wyndham had less than 200 lots to sell at the end of Q1.’21.

Melton had over 800 lots whilst Wyndham had approximately 400 lots, supplying more than half of the overall stock availability within Metro Melbourne and Greater Geelong.

Overall, rapid land take-up together with a shortage of stock indicate an improvement in consumer confidence within a recovering economy.
Red23 managing director Terry Portelli said they are anticipating a softening in the number of sales over the next few months.

“This is mainly due to a lack of stock on the market, demand will continue to be strong, particularly investors from interstate such as Sydney who are keen on capitalising on Victoria’s price growth,” Mr Portelli said.

“The strength of the established market is assisting in sales within greenfield areas as buyers struggle to buy in to the established housing market due to current market prices being achieved.

“Working from home arrangements is giving people the choice to buy a bigger home on a block of land further out due to the change in their work structure.”

The Metro Melbourne median land price increased by 1 per cent this month to $328,000 with no change to the median land size, overall, it has increased by 0.92 per cent year on year and by 1.86 per cent quarterly.

It is not alarming that Greater Geelong has decreased in its median land price this quarter, again, as higher-priced land estates are temporarily out of stock.