While falling 4.9% from July, the 2,530 gross lot sales in August across Melbourne and Geelong still represents a robust level of activity, and was achieved despite Melbourne’s lockdown 6.0 affecting much of the month. Buying land and building a home is not an instantaneous process, and buyers are confident that when it finally comes time to build and move in, Victoria (and by extension Australia) will have returned more to normalcy, avoiding the disruptions associated with widespread lockdowns and state border closures.
Notably, gross sales escalated by two thirds over the month in Geelong to 411 lots, which lifted its proportion of total sales to a long term monthly high of slightly above 16%. This suggests the halving of the Regional First Home Owner Grant to $10,000 from the start of July is having little adverse impacts. The western growth corridor remains the largest residential land market, with Melton accounting for 23% of all gross lot sales, followed by Wyndham on 18%.
Lot absorption is continuing to outpace new supply, evident by the number of lots remaining on the market at the end of the month trending downwards through 2021. Tightening supply levels is applying increased upward pressure on lot prices, leading to Melbourne’s median lot value rising by 2% over August to $328,000. Significantly this was its highest amount since January 2019. The median lot size remained more steady, only reducing marginally to 387sqm.
We anticipate only a slight easing in gross lot sales through September, as Lockdown 6.0 continues to drag on, and case numbers grow. As we have seen from the beginning of the pandemic to now, new home demand has proved itself to be largely resilient against these societal shocks. And, with persisting low interest rates and a relative affordability advantage of the new home market when compared to the established dwellings, we expect volumes to remain robust.