Greater Geelong land sales outperforming Metropolitan Melbourne
NEW land sales volumes for Greater Geelong and Melbourne continue to fall as land availability tightens for the sixth month in a row.
New data looking at September from Red23, a specialist sales and marketing partner for land developments, medium density and mixed-use property development projects across Victoria, shows that land sales fell by over 30 per cent in July after increasing by 10 per cent in June.
Land availability fell 16 per cent in July whilst titled lots continue to make up approximately 10 per cent of all land availability, with the majority of titled lots located in Wyndham and Cardinia.
After the end of the Homebuilder Scheme, purchasers have switched to seeking land with longer title time frames.
Greater Geelong, with less than 150 land lots available had a 14.2 per cent increase in the median land price albeit the median land size remaining the same.
This is just one of the areas that Greater Geelong is robust and not surprisingly outperforming Metropolitan Melbourne in many ways.
In the short-term, demand will continue to outstrip supply in all markets despite prolonged restrictions.
The property market will remain strong particularly within the greenfield areas, as buying land or off the plan is an easier process than purchasing an established house during lockdown.
From April to July 2021, 64 per cent of land purchases had an anticipated title timeframe of quarter 2, 2022 (Q2.’22), 57 per cent was anticipated to title in quarter 3, 2022 (Q3.’22) and 45 per cent were anticipated to title in quarter 1, 2022 (Q1.’22).
Whilst this is a benefit to home buyers, rapid sales volumes in the last 12 months have depleted soon to title land and title timeframes are now pushing into quarter 3, 2033.
The longer timeframe is suitable for many homebuyers, particularly first home buyers and investors as they are able to purchase at today’s price and have more time to save and prepare for their house build.
With house and land prices increasing, the median house and land price across all the growth area municipalities start from $599,000 in the Mitchell Shire to $729,500 in the City of Casey.
Whilst these figures are favourable against established median house prices, affordability continues to become out of reach for many.
According to Domain’s First Home Buyer report (2021), it takes a couple between the age of 25 and 34 years within Melbourne over six years to save a 20 per cent deposit.
Whilst this number has not changed from 12 months ago; in 2016, couples would have been able to save for the deposit in just over five years, thus, building new is financially attractive to this demographic.
Furthermore, the report notes that in the western growth areas of Melbourne such as Wyndham and Melton, it will take approximately 55 to 60 months (4.6 to 5 years) to save for a 20 per cent deposit ($94,800 to $103,400).
In comparison, in Casey and Cardinia, it will take between 62 and 73 months (5.1 to 6 years) to save for a 20 per cent deposit ($106,000 to $125,000).
The metropolitan Melbourne median land price increased by 0.6 per cent this month to $329,000and the median land size remains steady.
Three of the eight growth area municipalities show a decrease in their median land price due to a decrease in the median land size and land stock shortages are also skewing the median land price.
Now more than ever we are seeing price differentiation in the median land price in all municipalities on a month-to-month basis due to the vulnerability of land availability in order to calculate the median land price.
Issues such as limited variety of land sizes easily skews the median land price.