Land shortage thwarts any significant drop in lot values

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

In this latest update, Red23 recognises there is speculation that demand for greenfield land lots will begin to subdue in 2022.

Despite this, Red23 believes that the demand for land remains, but the shortage of current land availability is making it harder to determine the true value of demand.

Land prices continue to increase whilst land availability remains low with approximately 1,200 land lots available.

But Red23 are starting to see signs that the heat in this market is coming off, primarily due to affordability and the increase in appeal for units, townhouses and apartments.

Apartment approvals are on the rise and the fear of lockdowns due to the pandemic is no longer a fear.

Land availability has only increased slightly from last month; the first time since September 2020, due to increased availability in Cardinia, Hume, Whittlesea, Wyndham and Melton.

The time it takes for land to sell has increased slightly from 1 month in Q4.’21 to 1.2 months in Q1.’22. Whilst in Q2.’21 and Q3.’21 land lots were on the market for an average 2.8 months and 1.5 months respectively.

This is a direct correlation with the stock of available land, as the large volume of sales in 2021 reduced the overall land supply throughout the year.

The median land price increased across four municipalities whilst the metro Melbourne median land priced increased slightly again to $386,500, however, the median land size bounced back, increasing by 4sqm.

Greater Geelong’s median land price decreased by 2.6 per cent due to a slight decrease in the median land size from 457sqm to 448sqm.

Cardinia’s median land price increased again by 19.1 per cent whilst its median land size increased by 11.9 per cent.

Land availability for Cardinia remains the lowest in all metropolitan Melbourne corridors.

As the cost-of-living increases, inflation at its highest rate since the introduction of GST and the hybrid model of work starts to diminish, Red23 believe that living dynamics and housing choices will change.

It will be interesting to see if housing in regional areas evolve into weekend or rental homes whilst owners rent or buy a home closer to their place of work.