This article is from the Australian Property Journal archive
RECORD population growth, pent-up demand, a housing shortage and the use of incentives have steered Melbourne’s land market to steady improvement after a period of low sales volumes.
According to Oliver Hume’s latest Quarterly Market Insights, that population growth, tight rental market, and interest rate certainty will likely underpin a gradual recovery in the Melbourne land market in the second half of the year.
Land prices edged slightly higher in the June quarter, helping lift the annual price growth of conventional lots to 2.9%.
Median prices in metropolitan Melbourne lifted 1.3% in the June quarter to $390,000, with the highest increases in the local government areas of Melton (up 4.9% to $396,000), Mitchell (3.7% to $361,000), Wyndham (2.9% to $384,800) and Hume (2.8% to $385,900).
Cardinia returned by some distance the weakest result, down 13.7% – or $63,000 – to $397,000.
Lots in Greater Geelong were down 1.2% to $409,900, although returned one of the strongest annual results with gains of 7.3%.
Oliver Hume CEO project marketing Julian Coppini said residential land sale volumes in Victoria remained relatively low during the quarter although, more recently, there has been a steady improvement.
“This improvement has been driven by a range of factors including robust population growth, growing pent-up demand and housing shortages (and rental market pressures) and increasing use of incentives and rebates,” he said.
“The ongoing rebound in the established property market and property price increases are also drivers of the rebound in residential land sale volumes.
Upgraders and downgraders, especially second home buyers, continue to underpin demand, he said, while first home buyers continue to face significant pressure due to major serviceability and affordability challenges.
Coppini said land market activity is expected to steadily improve over the course of 2023 as underlying demand and housing shortages continue to grow.
Oliver Hume head of national research George Bougias said buyer sentiment would continue to be tied to interest rates.
He said any further increases in interest rates could delay any recovery and make it even more difficult for first home buyers, and could have a greater negative impact on new dwelling supply, exacerbating housing shortages and leading to higher prices and rents over the medium to long-term.
