September sees lift in buyer demand
There has been rebound in confidence in the housing market during September according to Westpac – Melbourne’s Institute Index of Consumer Sentiment September report.
It shows that the ‘time to buy a dwelling’ index lifted 8.8 per cent which has recovered all of the decline that was seen in August.
However, the Index is still 26.8 per cent below its November 2020 peak and similar to the lows witnessed in previous cycles since the Global Financial Crisis.
Red23, which is a specialist sales and marketing partner for land developments across Victoria, said that as prices continue to increase in the established and new homes market, affordability has again become an issue.
Red23 managing director Terry Portelli said affordability is leaving first home buyers with little choice in the market.
“We have seen a decrease in activity from them due to the increase in investors and their appetite to price first home buyers out of the market,” Mr Portelli explained.
“Future lending restrictions to investors is likely to occur in the near future which will equate to a pricing correction in the market as seen in mid-2019.
“Presently, we are experiencing an increase in investors as they are encouraged by rising prices and the prospect of capital gains, while owner occupiers are responding to deteriorating affordability.”
Increasing interest in the regions has been boosted by the deteriorating affordability in the middle ring areas that is seeing many families move further out to greenfield and regional areas.
For some, it’s either this or or accept living in a smaller townhouse or apartment.
For the moment, detached houses are preferred over medium density living due to the pandemic, however, this trend may soon come to an end.
The report shows that land sizes have decreased by 3 per cent in metropolitan Melbourne and 17 per cent in Greater Geelong in the last 24 months as prices increase.
The metropolitan Melbourne median land size is currently 388sqm and 400sqm in Greater Geelong.
Blocks which are 350sqm are most affordable in Mitchell Shire with an entry price of $245,000 followed by Melton South at $272,000.
Wyndham also offers this block size at Mambourin for an affordable price of $283,000.
In established areas such as Point Cook, this size block is $469,000 and in Cranbourne it is $366,000.
Comparing these lot prices to the same time in 2019, it was $390,000 in Point Cook and $330,000 in Cranbourne.
In the short-term, demand for land in all catchment areas remains strong and land availability is anticipated to slow with limited land releases expected for the remainder of 2021 as land title timeframes push well into 2023.