New land market remains sound despite a few bumps along the way

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

Although it was anticipated house prices nationally would fall by between 15 per cent and 20 per cent by the end of 2022 due to higher interest rates and inflation, CoreLogic data shows the combined capital cities’ median house price only decreased by 12.8 per cent.

Melbourne’s median house price fell 8.1 per cent during the 12 months to December 2022.

Further indications that the housing market has slowed can be seen in new loan commitments which decreased by 3.7 per cent in November 2022, while refinancing rates are on the rise as people seek better interest rates.

Red23 predict the correction in the established and new home markets is expected to continue well into 2023, with a recovery in sales and steady increases in prices expected in 2024.

In 2022, Red23 Research recorded land sales across Metropolitan Melbourne and Geelong were about half of what was achieved in 2021.

This was due to a lack of stock in the market in the first half of the year, the rise of living costs and increases in interest rates from May 2022.

Red23 Managing Director Terry Portelli said the greenfield land market remained sound when looking ahead, and they anticipated a steady economic year.

“Rate rises are expected to increase four more times before August, however buyers will adjust to the new interest rates and make use of any price reductions and incentives in the land price or build price, which will drive a steady selling season this year.”

The report shows overall land availability increased by about 230 lots from 2021 to 2022.

There were about 2,000 lots available by the end of 2022 including more than 500 lots in Wyndham, more than 400 lots in both Greater Geelong and Melton with Casey having about 300 lots available.

Mr Portelli said despite the heat in the market subsiding, the median land price in Metropolitan Melbourne remained at a high level, reaching a peak of $399,000 in August and September 2022 while the median land size remained unchanged at 392sqm.

Overall, the median land price increased by 9.37 per cent throughout 2022. By the end of 2022, Cardinia, Casey, Melton, Hume, Melton and Greater Geelong LGAs reached a median land price above $400,000.

For the month of December 2022, the median land price increased in all municipalities except Hume.

The largest change was in Greater Geelong with a median land price of $422,950, which is a 1.88 per cent increase from November.

Whittlesea and Cardinia increased by 1.77 per cent and 1.76 per cent respectively, while Melton and Mitchell recorded no change in their median land prices.

Cardinia with the least amount of available land, had a yearly price increase of 22.65 per cent with the highest median land price of $483,500 and a median land size remaining high at 420sqm. Melton also recorded a double digit increase of 14.09 per cent throughout 2022, indicating strong demand for land as supply declines.

Greater Geelong has achieved several outstanding years of demand and price growth. Last year proved to be its slowest, with a median land price gain of only 3.65 per cent.