Melbourne Land Market Snapshot – August 2022

Gross lot sales across the growth areas of Melbourne, Geelong, Ballarat, Bendigo, and Macedon increased by 4.9% over August, halting the downward trend in vacant lot demand witnessed during the previous five months. However, 1,049 total lot sales in August still reflects more subdued purchaser sentiment in the new home market, as buyers continue to exhibit cautionary behaviour in response to rising interest rates, cost of living pressures, and home construction costs. This is highlighted by gross lot sales in August being 61% below their corresponding figure in the same month.

Melbourne’s median lot price increased by 3.2% over August, reversing the correction from the previous month and returning to $382,000. However, this price escalation was attributed to the slightly larger 3.4% growth in the median lot size to 362sqm, resulting in the median per sqm price edging lower in August. The decline in the median per sqm price in Geelong was more significant at almost 9% after its median lot price remained static at $379,000, while its median lot size expanded by 9.6%. Notably, after Melbourne’s median per sqm lot price surpassed the corresponding figure for the first time last month, Geelong’s median per sqm price has reverted to again be more affordable over August.

After both growth corridors recorded a long term low in gross lot sales over the previous month, August witnessed sales activity rebound to increase by 63% in Ballarat and 28% in Geelong. This led to their respective shares’ of total gross lot sales lifting to 9% and 5% respectively. Within Melbourne, only the Northern growth corridor experienced an increase in lot sales - rising by 11% and boosting their proportion of total sales to 26%.

Between the 2016 and 2021 Census, owner occupiers accounted for approximately two-thirds of the change in tenure type (with investors constituting the remaining third) across the Melbourne growth corridors and Geelong. This proportion for owner occupiers increased to three-quarters in Bendigo and 86% Macedon, although was lower at around 60% in Ballarat. This highlights the prominence of owner occupier purchasers across all the growth corridors, and their importance in supporting new home demand.