Land sales slow as availability increases

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 stock availability has almost tripled within the past two months in some municipalities, as sales have slowed.

Overall, in the 12 months to June 2022, Red23 have witnessed a decrease of about 218 lots across the metropolitan area and Greater Geelong.

There were about 1,900 lots available 12 months ago and this number continued to fall at a monthly rate of approximately 10 per cent to February 2022, where there were 1,000 lots on the market.

Since March this year, availability of land has slowly increased due to a combination of factors including decreasing consumer confidence and deteriorating affordability.

Wyndham has had the largest increase in land availability year on year with approximately 130 additional lots, Casey with 90 additional lots, Hume with 44 additional lots and Whittlesea with 29 additional lots.

This trend is not consistent across all municipalities, with Cardinia and, Melton having less stock than 12 months ago while Greater Geelong remains at similar levels.

Red23 are surprised there is not more stock on the market than 12 months ago but believe this is due to the continuation of small land releases.

The Greenfield market is beginning to feel the pinch though, with 5 per cent deposits being adopted by several land estates across the municipalities.

The western corridor (Melton and Wyndham) are providing 45 per cent of available land and the north (Whittlesea, Hume and Mitchell) providing 33 per cent of available land.

This is a change from 12 months ago when the west provided 55 per cent and the north provided 25 per cent.

The shift is due to an increase in the number of land estates in the north, particularly in Sunbury and Donnybrook.

The southeast (Casey and Cardinia) has remained consistent with providing about 20 per cent of available land.

The median land price presently sits at $396,000 with a median land size of 392sqm, a slight increase from May’s median land price $390,000.

Cardinia increased by 17.1 per cent this month due to an increase in stock availability while Casey, Greater Geelong, Hume and Mitchell saw slight decreases.

Prices have stabilised with list prices not yet being adjusted and rebates may play a part in the coming months if sales continue to slow.

According to Westpac Sentiment survey: “The ‘time to buy a dwelling’ index fell 3.1 per cent from 77.5 in May to 75.1 in June – a new post-GFC low.”

This is not a surprise with deteriorating affordability and rising interest rates.

With the increase of interest rates announced by the Reserve Bank of Australia and the four major banks, many developers have begun to re-introduce their builder incentives and referral incentives, alongside the decision to reduce their deposited amount to 5 per cent.