Melbourne’s land market stable as Geelong sees sales surge

The Geelong region has been the shining light in greenfield land with sales rising by 16 per cent, compared to metropolitan Melbourne seeing a 5 per cent increase in sales.

Recent data released by Red23 shows Melbourne’s land market is showing some resilience despite ongoing economic pressures, with median land prices stabilising and sales activity improving across key growth regions.

As of December 2024, Melbourne’s median land price stood at $420,000, reflecting a 2.4 per cent increase over the past year.

However, the median land size has decreased slightly by 1.3 per cent to 395sqm, continuing the trend towards smaller lot sizes to enhance affordability.

Red23 note that despite challenging sales conditions in recent years, 2024 recorded approximately 6,000 land sales in Metropolitan Melbourne, a 5 per cent year-on-year increase while Greater Geelong experienced even stronger growth, with sales rising by 16 per cent, largely driven by rebates and incentives that have made land more affordable.

Sales were concentrated in Melbourne’s key growth corridors, with Wyndham (27 per cent), Casey (26 per cent), and Melton (14 per cent) leading the market due to their high land availability and project concentrations.

Red23 managing director Terry Portelli said that despite recent economic challenges, Melbourne’s land market was showing encouraging signs of recovery.

“Buyers are responding to incentives, and titled stock is attracting strong interest.

“With expected interest rate cuts on the horizon, we anticipate renewed confidence in the market in the second half of 2025.”

The Greenfield New Land Update reveals regional areas such as Mitchell Shire and Cardinia had the highest proportion of titled stock, with nearly 50 per cent of lots already titled.

 

The number of available lots has increased by 30 per cent year-on-year, though this is expected to stabilise as financial incentives for titled lots remain strong and sales continue to rise.

The report identified that rising construction costs remain a challenge for affordability. According to CoreLogic’s latest Cordell Construction Cost Index (CCCI), building costs increased by 3.4 per cent in the final quarter of 2024, driven by labour shortages and higher material prices.

These factors are expected to persist in the near term, placing continued pressure on buyers. Looking ahead, the market is expected to stabilise over the next six months as economic uncertainty persists.

With inflation nearing its target, a decrease in interest rates is anticipated before mid-2025, which may further support demand.

The Westpac-Melbourne Institute Consumer Sentiment Index for December 2024 showed a slight improvement, though overall sentiment remains cautious.

The Index confirms that high interest rates and cost-of-living pressures continue to weigh on consumer confidence.

While house prices remained steady toward the end of 2024, consumers remain cautious about the future of the property market.

However, Red23 predict the uplift in sales in Q4 2024 suggests a more positive outlook for 2025.