Melbourne Property Market – Residential Land Price Growth to Moderate?
Melbourne Growth Area Land Market: March 2018 Quarter
At the end of December 2017, the average lot price in Melbourne’s growth area land market was at $303,000 and the volume of sales were dropping off from the previous quarter and just under 5800 lots, or 1900 odd lots per month.
The recent March 2018 data from UDIA Victoria and key industry research partners has revealed that the price growth has in fact continued, with median lot price up to $323,000, another 6.8% 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 have shrunk a little compared with 3 months ago at around 400m2, down from about 415m2 at same time last year.
The rate of price growth for land continues to outstrip established areas, although the last quarter has seen established area prices up about 4% for houses and 2% for units. Demand appears to remain reasonably high, however, the signs of things slowing a little do continue from last quarter.
Land sales volumes have continued to drop off from their record levels 9 months ago, recorded at just under 5000 lot sales for the quarter. That’s a further 15% less than last quarter, and 30% less than 6 months ago.
It is true that pre-sale to settlement timeframes have increased significantly, and this is due mostly to a shortage in construction resources. There is also a dwindling number of new housing estates, and as a result less lots are being released for sale. This could be part of the reason for the lower trending sales volumes, but we also feel that the rate of price growth may have pushed a little too far and may need to somewhat moderate in the short term to stabilise volumes.
Below is the most recent graph from RPM’s research division which provides a snapshot of the land sales volume and housing estate changes over the last couple of years.
Update on VPA’s Commitment to New Land Supply
In late August 2017, the Victorian Planning Authority announced a commitment to re-zone approximately 100,000 lots via 17 Precinct Structure Plans by the end of 2018.
Including Wollert (15,000 dwellings) that was gazetted in February 2017, we have seen the following PSP’s gazetted to date:
Mt Atkinson & Tarneit Plains – September 2017 (6,700 dwellings)
Donnybrook & Woodstock – November 2017 (16,400 dwellings)
Plumpton and Kororoit – February 2018 (20,000 dwellings)
So that’s about 58000 lots re-zoned since February 2017, and 43000 since the announcement. Of the 43000, you can’t really count Plumpton and Kororoit as yet. Although the PSP’s were gazetted, the accompanying Infrastructure Contributions Plans have been delayed, and therefore subdivision permits for any sites within these PSP’s cannot yet be issued. We expect that this will be resolved in July though.
McPherson (10,000 lots) is likely to be the next PSP completed.
