This article is from the Australian Property Journal archive
DEMAND in Victoria’s land market continues to outweigh supply, with record sales numbers and further price gains posted in 2017, as Melbourne’s west remained the city’s key growth corridor.
Oliver Hume’s latest Quarterly Market Report showed the volume of sales for the year was taken to beyond 50% higher than the previous peak of 2008/09, and average prices were up 6%.
Over the December quarter, the median price of land in metropolitan Melbourne’s growth areas rose 3.0% to hit $301,500.
Oliver Hume director Paul Ciprian said the strong December quarter result ensured that median lot prices rose generally by at least a third throughout 2017, and in some cases, by more than 40%.
“Victoria’s improving economy and labour market have been a key driver of the new land market,” he said. “Following the end of the mining and resources boom and the transition to more broad-based growth Victoria, together with New South Wales, have created the most number of jobs in Australia.”
Price gains were seen between 21%, in Wyndham, and 42% in Hume and Whittlesea year-on-year to the December quarter. Lot prices are currently most expensive in Casey, at around $350,000, with nearby Cardinia, as well as Hume and Whittlesea in the north having also breached the $300,000 mark.
Wyndham is on the edge of $300,000, and Mitchell and Melton are both over $250,000.
Prices in all but two of the municipalities – Mitchell and Melton – rose in each quarter of 2017, and the outliers only saw one quarter of easing.
Active projects in key Victorian municipalities fell 5% to 170, largely due to sold out projects not being replaced with new projects.
Melbourne’s west is home to more than 50 active projects, while the northern corridor had 38 active projects and the south-east corridor more than 31.
Ciprian said an emerging trend over the last year has been a decline in the stock offered to market as developers and vendors sought to adjust to capacity constraints and longer time to title.
A lower level of stock in the December quarter and the traditionally slower Christmas period combined to see lot sales fall 18%, from more than 6,000 in the September quarter to 5,070.
Respective data from Oliver Hume and the Australian Bureau of Statistics showed the percentage of lots sold was well above 2016 levels throughout last year; for much of the 2017 the rate was more than 55%, having been around 45% the previous year.
The northern and south-east corridors saw a small increase in larger lots sold (more than 400 sqm), and the Western corridor saw an increase in smaller lots sold.
“The result was partly driven by stock availability and pricing with buyers keen to enter the market across the product segment including purchasing larger lots,” the report said.
The long-term trend of shrinking lot sizes is ripped to continue through 2018 and beyond, driven by affordability, demographic changes – including smaller household sizes – and policies such as an increase in need for townhouse/medium density products due to the small lot housing code.
Data from the December quarter showed around 40% to 60% of lots sold in each corridor being below 400 sqm.
Oliver Hume national head of research, George Bougias said while price growth in the recent property cycle had been strong, the Melbourne land market remained relatively affordable especially when compared with Sydney.
“Population growth is supported by near record levels of overseas and interstate migration as the state continues to attract new residents.
“These high levels of migration continue to provide the foundations for the ongoing strength of the new land market,” he said.
Victoria’s population growth in the year to June 2017 was more than 144,000, up 2.3%, making it now home to more than 6.3 million people.
New Melbourne lots only last around 21 days before purchased, chopped from nearly 200 days five years ago.
Except for the first quarter of 2015, the average time on market has now fallen or remained steady in every quarter since the third quarter of 2013, having peaked 6.6 months at the end of 2012.
Australian Property Journal
