Land frenzy eases
The established market is witnessing a slow down as stock levels start to increase and the number of buyers has subdued.
The market is seeing a fall in established areas in the inner and middle ring of Melbourne whilst price reductions are also being asked.
In past cycles, the greenfield market has followed suit and usually lagged by three to six months.
Red23, specialist sales and marketing partners for land developments across Victoria, report that investors remain active in the market as first home buyers are slowly priced out.
Red23 managing director Terry Portelli said they have seen a gentle fall of three per cent in first home buyers in the last 12 months whilst investors are still six per cent lower than last year overall.
“Land availability remains low with approximately 1000 lots currently on the market in Metropolitan Melbourne and Greater Geelong,” Mr Portelli said.
“The Metro Melbourne median land price has remained stable whilst land size has fallen 2.5 per cent.
Upgraders have been consistent with a doubling in the number of third home buyers, possibly due to a personal need to upgrade, relocate or downsize.
Whilst investor sales are welcomed, many developers are putting a cap on the number of sales being made to investors to build a tight-knit community of home owners.
Due to affordability challenges for first home buyers, first steps to getting them back into the market has been to reduce deposits from 10 per cent to five per cent and to stabilise prices.
This may take some time but will become more necessary in the near future.
Land availability remains low in Metropolitan Melbourne and Greater Geelong at the end of February.
Greater Geelong’s median land price increased by 38.7 per cent due to the increase in its median land size from 400sqm to 457sqm (dependent on stock available at the end of the month).
Overall, Greater Geelong’s success continues, with a year on year change of 66.4 per cent even post the pandemic.
This is due to a shortage in supply and continued demand from a mix of Melbourne and local Geelong buyers.
At Red23, 53 per cent of sales in Armstrong Creek this year are to buyers from the Greater Geelong area, 35 per cent are from Melbourne and surrounding municipalities whilst a small percentage are from the Surf Coast Shire.