Land sales boom across Melbourne and Geelong’s new housing estates
The land boom across Melbourne and Geelong’s growth areas is gaining traction as housing estate lot sales soar close to peak levels last tapped four years ago.
About 6508 land lots were sold in the fringe growth corridors of both cities over the three months to the end of last year, nearly double the previous December 2019 quarter, RPM Real Estate Group’s latest Residential Market Review shows.
Thanks to the taxpayer, land lot buyers will get a combined $95 million if they take up the HomeBuilder grant.Credit:Paul Rovere
The strong uptick in city fringe land sales, popular with first time buyers and families, is tracking the path of the pandemic and the government’s $25,000 HomeBuilder boost designed to counter it.
Nearly half of all the 6508 new land buyers will be eligible for the grant, extended to March 31 this year, and another 14 per cent can claim the smaller $15,000 grant, RPM estimates.
Those buyers will get a combined $95 million courtesy of taxpayers if they take up the grant, which gives purchasers up to $25,000 if they start building their house within six months of buying.
“The outlook for the residential property sector is the most positive it has been in some years,” RPM chief executive Gary Dunne said.
“It’s clear that the impact of HomeBuilder has been swift and effective. Inquiries and deposits rose to levels not seen since the peak of the property market in late 2017,” he said.
While lot sales in new housing estates usually lag behind movements in established house prices, they are now tracking Melbourne’s older suburbs where home prices are surging at their fastest pace since 2003.
That has resulted in a corresponding upswing in construction.
“Finance approvals by owner occupiers to build in the December quarter are 80 per cent higher than the same quarter a year ago,” ANZ associate director of property Daniel Gradwell said.
From June to December last year about 17,382 applications for new builds were lodged in Victoria, higher than all other states and territories. Given the demise of apartments, most are likely destined for housing estates.
Nigel Satterley, boss of Perth-based Satterley Property Group, said sales were around 80 per cent of previous boom times.
In a sign of more positive times, the group will spend up to $600 million by the end of the year buying more development land in Victoria.
“It’s early days, but we’re seeing a return of investors,” he said.
The land surge, however, is not leading to a rise in lot prices. Melbourne’s median lot price and median lot size edged lower by 0.5 per cent in the December quarter to $304,000 and 392 square metres, respectively.
The boom is also likely to fade after HomeBuilder ends in April.
Housing estates won’t be able to rely on overseas migration and population growth to boost sales, a traditional source of new first-time buyers that has been savaged by COVID-19 travel restrictions.
However, Mr Dunne said Victoria’s rental reforms might shift property investors’ focus from buying established homes, that could require significant repairs under the new laws, to newly built, maintenance-free dwellings, a trend that would benefit new housing estates.
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