Victorian Greenfield Market Update – September 2023

The growth areas of Melbourne, Geelong, Ballarat, Bendigo, and Macedon recorded 775 gross lot sales in September; a 10% increase from last month. The cash rate remained on hold at 4.1% for the third consecutive month in September, which may be providing more certainty regarding maximum borrowing and purchasing capacity. Despite this, affordability across the new home market remains extremely challenging. This is reflected in the high incidences of rebates and discounts; as purchaser incentives are needed to overcome the considerable market headwinds and persistently weak sentiment.

New home demand increased across the south east and western growth areas of Melbourne and Geelong. Conversely, Melbourne’s northern growth corridor witnessed a decline in lot sales, with activity in Hume, Whittlesea, and Mitchell all falling to levels commensurate to the start of the year. As a result, its proportion of total lot sales also diminished to its lowest share since January.

Absorption continues to outpace new supply despite releases escalating over September. Combined with lots returned to the market though, total stock on the market continued to increase. This, together with the added competition from lot supply in the secondary market, has resulted in a more pronounced downward pressure on lot prices through September. Melbourne’s median lot price declined by 1.3% to $385,000, while its per square metre rate contracted by a greater 4.8% after the median lot size increased by 3.7% to 363sqm. Geelong’s per square metre rate decreased by a sizeable 11.9%, following a 13.6% rise in its median lot size to 414sqm and its median lot price remaining static at $395,000.