The new house market continues to experience relatively buoyant purchaser sentiment, despite ongoing strict lockdown measures, with Melbourne and Geelong growth areas achieving a robust total of 1,532 gross lot sales in September.
Demand for new dwellings has undoubtedly benefitted from the $25,000 HomeBuilder Grant and collapse in turnover activity in the established market. Furthermore, buyer preferences are also shifting to the growth areas, which provide the bigger homes and greater space that is becoming increasingly desirable as more people work remotely, all at a more affordable price that is attainable for first home buyers.
Gross sales increased by a solid of 194 lots or 14.5% from the previous month. More than half this escalation occurred in Wyndham, which clawed back market share lost to Geelong during the previous two months, after Geelong also witnessed the largest fall in monthly lot sales. Heading into September, Wyndham contained the greatest supply of titled/near titled lots, which continue to be in high demand from purchasers in response to the HomeBuilder grant. Overall, 32% of total sales were titled lots, with a further 27% likely to be eligible for the HomeBuilder grant as they are expected to be titled before the end of March 2021.
However, the deterioration in economic and employment conditions has elevated price sensitivity among purchasers. This has led to an acceleration in the monthly rate of decline in Melbourne’s median lot price over September to 2.1%, dropping to a value of $300,510. Although some of this fall was attributed to the reduction in the median lot size, the per sqm lot price was also down by 0.9% over the month. Significantly, lot pricing from both a median and per sqm perspective are now both at their lowest point since May 2019, which coincided with the trough in the previous market downturn.
The reopening of estate sales offices from October, albeit only for private appointments, is still likely to build on the momentum in sales activity in the growth areas. This has already manifest itself through improving enquiry levels during the first half of October, as owner occupiers look to take advantage of the current enhanced incentives available.