Melbourne Land Market Snapshot – March 2023

Gross sales across the growth areas of Melbourne, Geelong, Ballarat, Bendigo, and Macedon edged higher by 1.9% over March to 703 lots. However, purchaser sentiment remains heavily constrained, despite the growing incidence of rebates/incentives and attractive deposit terms trying to entice purchasers to enter the new home market. This is being offset by the continual deterioration in borrowing capacity and subsequent impact on purchasing power. This is a result of the tenth consecutive cash rate rise in March - which has lifted by a cumulative 350 basis points since mid-2022. Consequently, gross lot sales in March are more than two thirds lower than the same time last year.

Sales activity experienced double digit growth in the Northern corridor over March, leading to its proportion of total sales jumping to 32%. Other corridors to witness an increase in their share of lot sales included Geelong and Ballarat, although both were coming from long term lows over February. A substantial reduction in lot sales in Wyndham and Cardinia was the primary contributor to the proportion of total sales diminishing in their respective corridors, to 38% in the west and 15% in the south east.

Melbourne’s median lot price escalated by 2.6% over March to a new peak of $389,000, while growth in per sqm rates was stronger, after the median lot size reduced by 3.6% to 350sqm. Geelong also experienced higher per sqm rates, with monthly growth in its median lot price of 7.7% outpacing the 6.1% enlarging of its median lot size. However, it should be noted that both median lot price figures are likely inflated when taking into consideration the increased prevalence of rebates/incentives in the new home market, which are lowering the overall net purchase price. Nevertheless, price points in general are continuing to hold up steady in this challenging environment.