New home demand continued to strengthen in June, and was largely immune from any weakening in sentiment attributed to the two week snap-lockdown during the early part of the month. Melbourne and Geelong growth areas recorded a substantial 2,612 gross lot sales in June, representing a 3% increase from May, and the second highest monthly total for 2021.
Lot sales were more evenly spread among the growth areas. Melton’s proportion of lot sales diminished to 22% in June, after being 29% the previous month. This was offset by other major growth areas of Casey, Whittlesea, Wyndham, and Geelong all increasing share of sales activity.
The conclusion of two stimulus measures has likely pulled forward new home demand into June. These were; the 25% cut to stamp duty for vacant lot purchases, and the halving of the first home owner grant to eligible purchasers in regional areas to $10,000 from the start of July. Notably, the latter boosted sales activity in Geelong, which experienced an escalation in gross lot sales of 38% over June.
Strong lot sales volumes are outpacing lot supply, which is resulting in the number of unsold lots decreasing month on month. However, total lots on market in June was still a significant 134% greater than sales. This is eliminating any upward pressure on lot prices from buoyant demand and historical low interest rates, leading to Melbourne’s median lot price declining by 1% over the month to $315,815. The median per sqm price experienced a commensurate fall after the median lot size remained static at 392sqm.
Solid enquiry levels have persisted in July, with the structural shift in demand to large homes and attractive relative affordability of new homes in growth areas maintaining high interest from those in the market wanting to buy their first home or upgrade from their existing dwelling. This should provide the market with confidence that Victoria’s 5th lockdown will have a minimal impact on sales, as experienced with the two most recent lockdowns in February and late May/early June.