Regional rush boots land sales
Victoria’s property market has entered a period of growth and renewed confidence, moving firmly out of recovery mode as new highs were recorded in house prices and land transactions, according to RPM Real Estate Group.
The group’s first quarter Residential Market Review for 2021 demonstrates robust demand for land and townhomes off the back of consumer confidence, low interest rates and job growth.
The March quarter drove 7,465 gross lot sales across Melbourne and surrounding regions, surpassing its previous peak in the September quarter 2017 by five per cent and setting a new record for a quarterly period.
The conclusion of the HomeBuilder Scheme at the end of March continued to drive buyers into the market, with monthly gross sales reaching a new record of 2,944 in March alone.
In good news for the coming months, just one-third of sales were eligible for the scheme, demonstrating that buyers want to act in the absence of incentives.
RPM Real Estate Group Director Rod Anderson said that a lot of this demand was driven by Regional Victoria’s relatively affordable lot prices, the Regional First Home Owner Grant of $20,000, low borrowing costs, no stamp duty payable, and the hugely successful HomeBuilder Grant.
“In Greater Geelong, this resulted in a 15 per cent increase from Q4 2020,” Mr Anderson said. “Moving into Q2, we anticipate further demand to be pulled forward following the state government’s announcement during the May 2021 budget, to halve the Regional First Home Owner Grant to $10,000.
“This could create some vacuum later on in the year but will be offset to a degree by the structural shift in buyer preferences brought about by the pandemic, with many would be inner-ring buyers opting for a sea or tree-change.”
RPM’s Q1 data shows the median house price in Metropolitan Melbourne has crossed the $1 million mark, sitting at $1,004,500, an increase of 8.8 per cent relative to the December quarter 2020 – a significant increase of 12.1 per cent from the March quarter 2020.
Regional Victoria’s property boom has steadied with median house price increases dropping from 5.6 per cent in the December 2020 quarter to 4.1 per cent in the March quarter 2021 to come in at $510,500 – however, this comes after a 21.7 per cent increase over the past 12 months.
ANZ associate director property Daniel Gradwell said Victoria had “caught up” to the rest of the country over the past quarter, with interest rates a clear driver of buyer activity.
“It is a whole different world that we are operating in now compared to last year, and overall, the results are overwhelmingly positive,” Mr Gradwell said. “We have seen the land price increase over the month of April by 4.3 per cent with more mild increases likely to follow in the coming months.
“While we see strong fundamentals in the land market, we don’t expect sales to rival what had been achieved courtesy of HomeBuilder.”
In the regions it is anticipated a flurry of deals will occur over the coming weeks as buyers move to take advantage of the $20,000 regional buyers’ grant before it is halved on July 1.
Mr Kelly said the unknown is the state government’s new windfall tax, of which the long-term fallout could be supply – but the industry is awaiting clarification on a number of points before this can be understood.