Savvy Ballarat buyers should prepare to capitalise on a slower market with developers looking to complete deals on new land sales in the lead up to Christmas, said RPM National Managing Director of Project Marketing, Luke Kelly.
Our Q3 Greenfield Market Report shows lot sales in Ballarat fell 25% in Q3, with just 81 lots trading hands, a 49% decrease on the same period last year. The decline comes after sales rose 151% in Q2, largely driven by end of financial year offers designed to stimulate transactions, fuelling hopes of the start of a recovery.
The decline was in line with broader market conditions and mirrored sales across the Melbourne and Geelong growth areas, where sales dropped 6% during the quarter, after gaining 13% in the second quarter.
Mr Kelly said prospective buyers continued to face a multitude of hurdles from reduced borrowing capacity, down 30% from April 2022, through to stubborn inflation and cost of living pressures. In positive news for those in a position to buy, the sluggish quarter had spurred developers to do deals to shift stock in the weeks leading up to Christmas.
“Developers in Ballarat are offering incentives of 5% to 10% off the headline price to shift the titled stock on their books prior to the start of the festive season,” Mr Kelly said. “It is not just the developers putting out these incentives – builders have joined the party as well, with the combination of developers and builders working in harmony to drive significant savings in the order of $50,000 or more for new purchasers.”
“This means buyers looking to purchase can capitalise on the incentives in the market. Some may not settle on their lot for 12 to 18 months when the cycle may have turned, meaning potential capital gains alongside a different interest rate environment.”
Mr Kelly said the subdued market had resulted in the average lot price in Ballarat falling one per cent to $300,000, marking a low not seen since December 2021, and significantly below the median price peak of $315,000 in June 2022. However, he said the decline should be considered in context, with the median lot size also reducing by 10% to 401sqm, meaning the price per square metre actually rose 11%.
“The availability of smaller lots in Ballarat, including townhomes, is a positive providing more options for budget-conscious buyers those with limited borrowing capacity to get a foothold on the property ladder,” he said.
“The fact that lots remaining for sale at the end of the quarter averaged 492sqm, compared to the 401sqm average of sold lots, and a higher price tag of $313,000 is evidence of the price sensitivity of the market and the appeal of entry level options.”
“The western growth corridor offers the vast majority of lots, accounting for 80% of stock, with limited options for buyers looking to build larger family homes on lifestyle lots, which predominantly sit outside of this region.”
“That being said, we saw two new communities enter the market during the quarter, which has helped to improve the diversity of land available, with one located in the south and the other in the east.”
Mr Kelly said sales cancellations rose 78% in Q3, the highest level in over three years, as buyers reconsidered or struggled to settle on previous purchases. “We see this as a concern for the foreseeable future, as households continue to face cost of living pressures and repeated rate rises reduce borrowing capacity, meaning buyers from 12 to 18 months ago may be reconsidering their purchases,” he said.
“Given the current interest rate environment and the latest increase to the cash rate this month, we’re not anticipating a significant improvement in market conditions in the near future.” Just 36 lots were released in Q3, in line with Q4 2016 lows, as developers focused on delivering lots, with a total of 446 lots remaining on the market in Ballarat at the end of the quarter. Mr Kelly said new land releases were anticipated to increase in the lead up to Christmas to stimulate activity.
This article references findings from our Q3 2023 Greenfield Market Report.