Victorian Greenfield Market Update – November 2023

New home demand across the growth areas in Melbourne, Geelong, Ballarat, Bendigo and Drouin contracted by 13% to 660 gross lot sales. This was the second-lowest monthly total of sales activity across these growth areas for the year, and only slightly above the seasonally impacted January. This decline was expected as November’s 25 basis point interest rate rise brought the cash rate to a 12-year high; further intensifying affordability concerns. With inflation remaining high, household finances are now under extreme pressure, limiting the effectiveness of rebates and discounts that may have otherwise addressed fragile purchaser sentiment and barriers to entry.

Lot sales in the South East growth corridor performed better in November, reaching a two-year high of just above 23% of total sales. Ballarat’s 6% proportion of lot sales was a high for the calendar year. Conversely, falling sales activity in Hume and Sunbury led to the Northern growth corridor’s share dropping below 26% - its lowest since January. Geelong’s share of lot sales remains at 6%, which is significantly below its long-term average.

At the headline level, Melbourne’s median lot price edged 0.3% higher to $387,000 and the median lot size remained static at 350sqm – resulting in commensurate growth in the per square metre rate. When factoring in rebates and discounts, however, lot prices would be lower than last year with an overall decline in the median lot price. Geelong’s median lot price corrected by 2%, falling to $385,000, in response to a 3.5% reduction in its median lot size to 386sqm.