Lot Prices Moderate in Melbourne, Rise Sizeably in Geelong
Melbourne’s median lot price contracted by a marginal 0.6% over January, from last month’s record, to $351,950. New releases outpaced lot absorption, alleviating the upward pressures on prices. However, median lot size diminished 2.1%, resulting in per sqm prices continuing to increase. Conversely, dwindling active estates in Geelong has resulted in lots on the market falling to a long term low, with current supply equating to less than one month’s worth of demand. This induced a sizeable 12% escalation in Geelong’s median lot price to a new record of $368,000.
Sales Activity Makes Solid Start to 2022
The new home market has started 2022 with a solid 1,496 gross lot sales across the growth areas of Melbourne, Geelong, Ballarat, Bendigo, and Macedon. This level of activity was 25% higher than the average January figure observed over the last eleven years. Despite this, January 2022 was still close to 30% below the corresponding figure in the first month of 2021, where demand was inflated by the HomeBuilder grant bringing forward new home demand.
Western and Northern Corridors Continue to Rise, Geelong Recovers
Although all growth corridors experienced a monthly decline in gross lot sales, the rate of decrease in the Western, Northern and Geelong corridors was less than half that in the South East corridor. Subsequently, the proportion of gross lot sales in the Western (43%), Northern (24%) and Geelong (9%) corridors all increased, at the expense of a declining concentration of sales in the South East corridor (16%).
Purchasers Continuing to Favour Larger Lots For Now
The median lot size of lots sold during and post HomeBuilder in Melbourne’s growth corridors has remained similar. Purchasers have continued to prefer lots that can accommodate larger homes in response to working from home mandates, with higher savings through the pandemic likely offsetting the removal of Government stimuli. This is further highlighted by the significantly smaller median size for lots remaining on the market. However, affordability is expected to be a more pertinent issue after strong price growth and with interest rates expected to rise, demand is anticipated to become increasingly budget conscious.