Melbourne and Geelong saw median lot size increases this month, leading to overall median lot prices reaching new highs

 

New Home Demand Remains Buoyant Despite Drop in Sales

Growth areas across Melbourne, Geelong, Ballarat, and Bendigo recorded 2,495 gross lot sales in November. Although this reflected a 13% decline in sales activity from last month and was the lowest result since January, gross lot sales remained higher than the long term (2015-onwards) monthly average of approximately 1,800 lots. Key drivers are the larger homes on offer, more affordable price points, and continued low borrowing costs.

South East Overtakes the Northern Corridor

Casey was the only growth area to experience a monthly increase in activity over November, with gross lot sales rising by 15%. This underpinned an improvement in South East growth corridor’s proportion of total sales to 25%, its highest monthly share in over two years. Ballarat was the only other growth corridor to see its proportion of gross lot sales increase, with the contribution to sales activity by the Western and Northern growth corridors both declining to a share of 38% and 22% respectively.

Lot Supply Outpaces Lot Absorption

Since peaking at just over 7,000 lots at the end of September 2020, the number of lots remaining unsold at the end of a month continually declined through to October 2021, more than halving to just under 2,900 lots. However, new lot supply has outpaced lot absorption for the first time in over a year, resulting in almost 3,100 lots on the market at the end of the month. This suggests that the number of lots remaining on market is near its low point, although the incoming trend is likely to see unsold lots fluctuate rather than increase.

Strong Growth Leads to Record Pricing

Price growth has accelerated over November, and more remarkably, Geelong’s median lot price has become more expensive than the corresponding figure for Melbourne. Overall, the median lot price escalated by a substantial 15.9% in Geelong to $369,000 and a solid 5.3% in Melbourne to $355,000, with both these figures being new highs. This price growth was attributed to an increase in the median lot sizes of 7.9% in Geelong to 432sqm and 1.8% in Melbourne to 388sqm. Subsequently, the resultant median per sqm lot price in Melbourne was still 7.0% more expensive compared to Geelong.