Melbourne Growth Area Land Market: December 2017 Quarter
At the end of September 2017, the average lot price in Melbourne’s growth area land market was at $288,000 and the volume of sales were just levelling off and just under 6800 lots, or 2250 lots per month.
The December 2017 data from UDIA Victoria and key industry research partners has revealed that the price growth continued, with median lot price up to $303,000, another 5.2% increase in just three (3) months, and more than 28% higher than this time last year.
Median lot sizes in Melbourne’s growth area property market remain relatively unchanged compared with 3 months ago at 416m2, but still around 3.4% smaller than the same time last year.
The rate of price growth for land continues to outstrip established areas which continue to level off. Demand appears to remain reasonably high, but there appears to be some early signs that things in the growth area market might just be starting to cool off a little.
Land sales volumes are have started to drop off from their record levels in the previous 6 months, recorded at just under 5800 lot sales for the quarter. Although this is nearly 15% less than last quarter, is only around 2% lower than the same quarter the previous year.
So what does this tell us? We suggested in the previous update that land price growth may slow at some point, and our feeling is that now that the gap between land price and established area prices is even smaller than it was 3 months ago, the reduced sales volumes might be an indicator that there is not much room left for land price growth in the short term. Having looked at some of the January and February figures, the signs indicate that both price and volume might just moderate for a little while. March figures should be out fairly soon so will be interesting to see what they look like.
Below is the most recent graph from RPM’s research division which provides a snapshot of the land sales volume changes over the last couple of years.
Update on VPA’s Commitment to New Land Supply
Since the Victorian Planning Authority’s announcement to re-zoning approximately 100,000 lots via 17 Precinct Structure Plans by the end of 2018, a couple more PSP’s that were in progress have now been completed.
Mt Atkinson & Tarneit Plains were completed in September and Donnybrook & Woodstock in November 2017, representing an estimated 6,700 and 16,400 new dwellings respectively. This adds to the estimated 15,000 dwellings in the Wollert PSP completed back in February 2017.
Plumpton and Kororoit PSP’s have now also been completed and were gazetted in February 2018, adding another estimated 20,000 future dwellings combined.
All up in simple terms that’s about 58000 lots re-zoned over 12 months versus about 26000 sold over the same period. To achieve the ‘few years of zoned land’ target for ‘balancing future growth’ that we highlighted in a previous blog, things seem to be heading in the right direction at the moment. This is probably something worth keeping an eye on in future.