Desire for new land in Melbourne softens, Geelong land remains stable

Red23, specialist sales and marketing partners for land developments across Victoria, have released their latest New Land Update report.

In this latest update, Red23 report land sales across Metropolitan Melbourne have slowed compared to previous years, driven by rising interest rates, inflationary pressures, and broader economic uncertainty.

These factors have made financing more costly for both developers and individual buyers, significantly reducing investor and driven purchases due to higher borrowing and construction costs and market unpredictability.

Regardless of these challenges, the data shows that first home buyers continue to drive the market.

Market Trends and Performance Land prices have softened in many parts of Metropolitan Melbourne, particularly in Cardinia and Mitchell.

However, the southeast and northern growth corridors, as well as Greater Geelong, have maintained more stable pricing, supported by steady population growth in these areas.

Red23 managing director Terry Portelli said that despite the present economic pressures, Red23 continued to see resilience in Melbourne’s land market, particularly in growth areas such as Casey, Wyndham, and Greater Geelong.

“First home buyers remain the driving force, supported by improved affordability and a strong desire to build their dream homes.

“Looking ahead, a stabilising economy and potential easing of interest rates could see increased activity by mid-2025, with both first home buyers and educated investors re-entering the market.”

The report also reveals some sales highlights seeing Year-to-date, 4,577 land sales recorded, with 1,600 sales in Q3 2024.

Monthly sales are expected to reach 600 for the remainder of the year, bringing the 2024 total to approximately 6,000.

Casey leads the market with a 27 per cent share, followed by Wyndham (26 per cent), Melton (15 per cent), Whittlesea (14 per cent), and Hume (11 per cent) with Cardinia and Mitchell accounting for less than 5 per cent of sales.

It also shows many regions experienced a significant decline in sales between Q1 2022 and Q1 2023, influenced by affordability challenges and rising interest rates.

Casey and Melton performed strongly in earlier years, peaking in 2021, while municipalities such as Hume and Greater Geelong experienced more moderate fluctuations.

Casey maintained its top position with a median land price of $480,000 – up 2.1 per cent over the past month.

Hume saw a notable monthly increase of 2.4 per cent, reaching $428,000 with modest increases of 0.2 per cent to 0.7 per cent were observed in Cardinia, Greater Geelong, Melton, Wyndham, and Whittlesea.

Metropolitan Melbourne’s median price remained unchanged, with lot sizes increasing slightly from 392sqm to 400sqm this month.