The August total of 1,329 gross lot sales within Melbourne and Geelong’s growth areas was 3.7% higher than the monthly average for lot sales across 2020, highlighting the importance of the $25,000 HomeBuilder grant in supporting sales activity.
This scheme is continuing to underpin demand for titled and near titled lots. Overall, 34% of total sales were titled lots, with a further 37% likely to be eligible for the HomeBuilder grant as they are expected to be titled before the end of March 2021.
However, the increasing breadth of economic and financial hardship experienced by households from the onerous stage four restrictions in Metropolitan Melbourne and stage three restrictions across Regional Victoria is evident in the 22% monthly decline in gross lot sales. This follows a 17% decrease over July, when Metropolitan Melbourne and Mitchell Shire were under less strenuous stage three restrictions.
The downward trend in lot prices is continuing, with Melbourne’s median declining 0.8% over August to $307,000, and 2.5% since March. Median lot size remained static at 398sqm, resulting in a commensurate monthly fall in per sqm lot prices. Conversely, Geelong’s median lot price escalated by a solid 6.7% to $301,750 and converged on Melbourne’s value, although its median lot size is larger at 448sqm.
Melbourne’s tougher lockdown restrictions has accelerated the shift in demand to regional areas, evident in the south west corridor with lot sales in Geelong outpacing Wyndham in each of the last two months. This has been aided by buyer preferences shifting to bigger dwellings to include a home office as more people work remotely, with Geelong benefiting from relatively more affordable prices on larger lots.
The slow and gradual roadmap out of lockdown for Metropolitan Melbourne is likely to delay the return of an upturn in sales activity, with only minimal changes to restrictions occurring through September. However, vacant lot demand is remaining resilient in the face of unprecedented circumstances, as low density living becomes increasingly desirable through the pandemic, and the HomeBuilder grant combined with improving affordability continues to make new house/land packages attainable for first home buyers.