The median parcel size in Victoria has shrunk by 4 square meters in just three months, forcing buyers to pay more for less to enter the housing market.
According to RPM’s latest Greenfield Market Report, the state’s median lot size for new properties stood at 366 square meters in the June quarter, down significantly from a three-month record low of 370 square meters.
Median prices for blocks around the city also rose 3.6% in the quarter, up 9.6% year-over-year to reach $379,000.
Rising costs are a key factor driving price increases, but developers are trying to keep blocks affordable by slashing their sizes.
Luke Kelly, managing director of marketing for RPM Projects, said that with more buyers pushing prices down from the existing housing market and looking to greenfield land, developers are likely to see serious buyers anyway. He said he was comfortable raising prices as much as he did.
Demand for suburban blocks remains, but is slowing due to rising interest rates, pressure on the cost of living and rising construction costs.
“Developers aren’t too frustrated by the drop in sales because they can complete construction,” Kelly said.
“People who buy today think it will probably take them 15 months to have their home ready.”
Kelly explained that household incomes have only increased slightly over the past few years, and buyers are compromising on block sizes and tend to buy smaller ones.
“Due to this demand, developers are producing smaller lots,” he said.
“Affordability will still exist for buyers whose household income has not changed, allowing developers to produce land and serve the market.”
New residential land prices in Melbourne’s growth area hit a record high of $380,000 in the June quarter, up $12,500 from March and up to $108,000 in five years, according to the latest data from real estate services group Oliver Hume. rose to
The report revealed that prices for the Cardinia Municipal Block rose a surprising 31.71% year-on-year, while Casey and the Greater Geelong Area rose 19.59% and 31.72% respectively.
The municipalities of Hume, Melton, and Mitchell also grew rapidly, with the Mitchell Shire block rising 24.3% ($65,500) over the past 12 months, reaching an average cost of $389,000.
Julian Coppini, chief executive of Oliver Hume Project Marketing, said the June quarter showed reasonable levels of sales and price gains, but that sales volume declined significantly in the September quarter. He said price levels are likely to stabilize.
“This is due to the slowdown in consumer and buyer sentiment, particularly around interest rates and inflation,” Coppini said.
Amid rising interest rates and a housing market shortage, the report found that 60% of buyers signed a contract within just 21 days of inspecting a block of land, and 16.3% of buyers signed a contract within 7 days. We will finalize the contract within days.
“In 2021 and early 2022, we saw many shoppers driven by fear of missing out on their chosen home site,” said Coppini.
“Over the past few months, we have seen buyer behavior continue to moderate given the market conditions…I think it will take more time going forward as buyers carefully consider various options.”
Matthew Kandelers, Chief Executive Officer of the Urban Development Institute of Victoria, Australia, said HomeBuilder and other stimulus measures “during the pandemic, have driven record demand for land in Melbourne’s growth corridors, with parcels in 2021. Sales reached a record 33,700 units, nearly double the long-term average.” .
He said the product mix across the market has pivoted towards smaller lots in response to rising prices and lifestyle choices.
“Rising interest rates and cost-of-living pressures have forced many buyers to reassess their borrowing capacity and buying decisions, and it is clear that market activity has stabilized in 2022,” Kanderers said.
“That said, the market has adapted and many new land releases continue to incorporate smaller lot sizes to soften the landing.”
Jack Davis, an agent at Belle Property Geelong, said the new Torquay and Mount Duned properties offered smaller lot sizes but appealed to buyers as an affordable entry point into the market.
“For 9 out of 10[buyers]low maintenance is attractive,” he said.
He noted that Villawood properties, such as Armstrong’s estate on Mt. Duned, also offer many nearby amenities, such as playgrounds, supermarkets, sports ellipticals, and schools, appealing to families and offering an alternative to large plots of land. said he did.
“Mostly families, but we also have seniors looking for something simpler and young people buying their first homes,” Davis said.
perks of small blocks
Dianne Geddes bought her 177-square-meter Maidstone property in 2012 and sings positively about its low maintenance costs.
She previously owned a 1940s house on a large block that needed “major renovations.”
“We decided to sell it and buy a brand new low maintenance one,” Geddes said.
The only maintenance now is maintaining a small garden. This was perfect for her as a business owner who worked “ridiculous hours”.
“But I still miss the grass and love gardening a lot,” added Geddes.
“In the future, I want a bigger garden and a one-story house.”
Geddes said he hopes to buy a larger block in about 10 or 15 years.
She would like to stay in Maidstone, but given the cost of the land, “may be forced to travel a little further”.
She lives with her son Tom Lendl, 22, and dogs Carl and Rico.
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Source link Block sizes in Melbourne housing estates hit record low as land prices soar