New land values in Bendigo region buck the trend

While market jitters continue to have an impact on the region’s real estate market, new research reveals that residential land values in the Bendigo region are on the rise.

New land values in Bendigo have reached a record high, despite a fall in sales, a new report by RPM Research, Data & Insights shows.

RPM’s latest Greenfield Market Report shows the median price of new land in Bendigo hit $267,000 in the first quarter of 2023, a 21 per cent increase on the same time last year and a one per cent increase on the previous quarter.

At the same time, the volume of land sales cooled, dropping 16 per cent in the quarter, with just 49 lots sold, a 66 per cent year-on-year fall and the lowest quarterly result since September 2021.

The decline reflected a drop across the broader Victorian market, with Melbourne and Geelong’s growth regions recording a nine per cent dip in new land sales to just 1879 lots sold, the sixth consecutive quarter sales have fallen across the regions, and the lowest result in four years.

RPM managing director or project marketing Luke Kelly said increased land availability in Bendigo was likely to help stimulate sales, with buyers also able to take advantage of incentives and rebates on offer, which were saving an average five per cent, equating to about $25,000.

Land availability in Bendigo reached its highest level since June 2020, with 194 lots on the market at the end of Q1 2023, a 13 per cent increase from the previous quarter.

“Bendigo’s northern region, which has consistently out-performed other areas, accounted for the lion’s share of activity in the first quarter, however, the improvement in land availability outside this area means there’s more diversity on offer for a wider range of buyers,” said Mr Kelly.

“The west offers value for money with larger lifestyle lots, while the east supplies premium lots at higher price points, which are ideal for upgraders looking to build new.

“Buyers who understand their borrowing capacity and are in a position to purchase are seeing the opportunity in the market, with more choice available and a genuine willingness from developers to negotiate, particularly on titled lots.

“Those with a longer-term view are also deciding to get in now at today’s prices to secure land that may not settle for 12-months or so, meaning they won’t start paying their mortgage until what is a potentially different interest rate environment.

“We’re already seeing a number of bank and non-bank lenders lowering their fixed home loan rates, indicating the rising interest rate cycle could be nearing an end, with the Commonwealth Bank of Australia even anticipating a rate drop toward the end of the year.”

Mr Kelly said, however, on the whole consumer confidence remained low, following 11 interest rate rises in 12 months, the rising cost of living and continued caution around the building industry.

“The reality for many is that their purchasing power has been significantly reduced by interest rate rises and cost of living pressures, so they’re assessing their options in terms of adjusting their buying expectations or delaying their purchasing decision,” he said.

“While we saw signs of improvement in sentiment following the Reserve Bank of Australia’s decision to hold rates in April, the May rise is likely to again dent this.

“We believe it will take several continuous months of interest rate holds to see any meaningful turn-around in confidence, so we’re anticipating signs of improvement toward the end of the year.”

Mr Kelly said the limited sales activity in the new land market would result in significant pent-up demand, with 18,000 lot sales required per year to service population growth in Melbourne and Geelong’s growth regions.

“On average, 1500 lot sales are required per month to keep pace with population growth, and we’re seeing a third of that at about 600 lots sold per month,” he said.

“That’s 900 people per month who are going to buy at some point, who are currently watching and waiting,” he said.

“This will be intensified by the subdued apartment building activity and the fact migration has returned and people are arriving in droves, keeping vacancy rates extremely low and pushing up rents.”

– BY DEAN WEBSTER