Momentum in lot sales activity has largely continued through July, with the Melbourne and Geelong corridors recording 1,693 sales.
This was despite the return to stage three restrictions in Greater Melbourne and Mitchell Shire at the start of the month. Weakening confidence was mostly offset by HomeBuilder, the $25,000 on offer being the most comprehensive assistance for eligible non-first home buyers in quite some time. With sales offices closed, projects have more seamlessly transitioned to online selling and buyers are now accustomed to this approach; carrying confidence in the off-site purchasing process.
The 1,693 gross lot sales was the second highest monthly total in 2020, highlighting robust sales activity despite a 17% drop from June. Notably, the fall in sales volume was limited to the Greater Melbourne growth area with Geelong avoiding the reintroduction of stage three restrictions until early August.
Titled and near titled lots continue to be in high demand, accounting for 37% of total sales, with up to 76% of lots sold eligible for the HomeBuilder grant. However, prices contracted slightly, with the median lot price edging down 1.3% to $309,500. This was greater than the 0.5% decline in median lot size to 398sqm, resulting in a reduction of per sqm lot prices.
The unprecedented move to more onerous stage four restrictions at the start of August will have wider and deeper constraints on the economy as more industries are forced to close or reduce output. The breadth of subsequent job losses and loss of income will influence the depth that purchaser sentiment weakens. In response, the three month eligibility timeframe from the signing of the building contract and commencement of construction under the HomeBuilder Scheme was doubled to six months to the end of June 2021. This is anticipated to ease concerns of purchasers from inevitable construction delays arising from stage four restrictions, and early signs in August are pointing to vacant lot demand holding up relatively well under the trying circumstances.