Melbourne Land Market Snapshot – February 2023

Monthly growth in lot sales generally occurs over February given the reduction in trading days and holiday period through January. The start of 2023 was no different, with total gross sales across the growth areas of Melbourne, Geelong, Ballarat, Bendigo, and Macedon escalating by 16% to 690 lots. However, this result still indicates weak levels of new home demand, with the ninth consecutive interest rate rise in February exacerbating already fragile purchaser sentiment and further reducing borrowing capacity. Moreover, lot sales are increasingly being supported by rebates/incentives, combined with attractive deposit terms, which minimise the cash outlay for buyers when signing a contract.

All three growth areas within Melbourne experienced an increase in vacant lot demand over February, which resulted in their proportion of total gross lot sales climbing to 42% in Western, 28% in Northern, and 18% in South East. Conversely, gross sales collapsed to decade lows in Geelong and Ballarat, leading to their share of total activity deteriorating to 7% and 1% respectively. Bendigo also contributed a minimal 2% of total lot sales after demand also declined in the growth area.

Rebates and incentives are assisting in keeping Melbourne's headline lot prices steady, despite stock on the market rising through a 74% boost to new lot releases over the month. Median lot price edged higher by 1.1% to $379,000, although this rate of growth was surpassed by the 3.7% enlarging of the median lot size to 363sqm. Consequently, the median per sqm price for Melbourne decreased. The opposite emerged in Geelong, with the per sqm price increasing after its median lot price remained static at $379,000 (identical to Melbourne) while its median lot size diminished by 2.1% to 392sqm.