Victorian residential land developers are offering thousands in incentives as a new report revealed monthly sales had dropped to the lowest level seen in 20 years.
The greenfields developers across Melbourne and Geelong’s major growth corridors reached for incentives as property services group Oliver Hume reported monthly sales had dropped to the lowest level seen in 20 years.
The median price for conventional lots across Melbourne remained steady at $385,000, the latest Oliver Hume Quarterly Insights report revealed.
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Oliver Hume chief executive officer project marketing Julian Coppini said while lower sales volumes were expected over the short term, overseas migration was expected to boost sales.
Selling conditions have cooled down, and that means that homes are taking longer to sell than they used to. So how long should you expect it to take in the current market?
He said sales also had been impacted by higher interest rates, cost of living pressures and post-Covid moderation in demand due to sales being brought forward in 2020-21.
“We’re starting to see some positive signs. We’re seeing projects which have the right stock, are meeting the market on price are actually selling well,” he said.
“Some new project launches where they’re priced to meet the market have achieved 10 to 15 sales overall on a weekend.”
Mr Coppini said the market turned quickly in April – when volume builder Porter Davis went into voluntary liquidation – which caught developers who had continued with usual price escalations just as a lot of buyers dropped out.
“And then when purchasers finally started to look back at the land market with some disparity and some new projects coming to market with the right pricing, what some developers said was let’s start rebating or incentivising the market.”
Villawood Properties executive director Rory Costelloe said first-home buyers made up half of purchasers for the developer, which is offering a $15,000 boost to eligible buyers on top of the $10,000 first-home owners grant.
Rory Costelloe from Villawood Properties
Villawood also offers $20,000 grants to care workers, and even airport workers at key Melbourne estates, while other developers such as Stockland also offered $20,000 rebates on selected lots.
“There still a lot of inquiry, but people are so nervous about interest rate stability because of all the news in the media about Eight Homes and Porter Davis,” Mr Costelloe said.
The building industry’s troubles should have passed by the time titles for land sold today were available from next year, Mr Costelloe said.
“It was double the land sales in 2021, so when all those titles came through in 2022 and early ’23 there was so much demand that all the prices went through the roof,” he said.
“There was this wave of demand that we’re still trying to fix and that’s going to take the better part of this year to do it.
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“There is going to be far less house builds next year, so that will bring house prices back down again.”
Mr Costelloe says that the building industry’s troubles should have passed by the time titles for land sold today were available from next year.
Mr Coppini said mum and dad buyers were once nervous about title times stretching to 24 months now thought it would give builders a chance to sort themselves out and potentially interest rates to settle.
First-home buyer Rachelle El-Hanna took advantage of Villawood Properties’ $15,000 boost to top up a $10,000 homeowners grant to secure a block in Sunbury, where she plans to build in 2025.
Ms El-Hanna, who lives with her parents in Doncaster, said she was driven by opportunity, affordability and location.
“It’s a great way to get into the market for a first-time buyer,” she said.
“That just gives me more flexibility and how much I can stretch myself financially as well and reduce financial stress. So the affordability was one of the biggest factor of it all. And then also a great opportunity to drive my future.”
People arrive to check out Villawood Properties Coridale estate display village.
Median lot prices moderated across most metropolitan Melbourne growth areas, rising only in the southeast and Geelong, where the volume of sales also lifted.
The most expensive median lot price is $576,000 at Berwick, compared to $345,000 for a block at Wallan and Beveridge, north of Melbourne.
The median price for 400sq m lots in Geelong was $415,000 at Armstrong Creek, and $379,000 at Lara.
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