Melbourne and Geelong growth areas recorded 2,536 gross lot sales in May, marginally more than April. Activity in Melton was particularly robust, with its 737 gross lot sales representing 29% of total sales across all corridors, and near its recent monthly peak achieved in March.
Historical low interest rates, the pandemic induced structural change in purchaser preferences towards larger homes, and the improving relative affordability advantage of new homes compared to established dwellings have all supported the continuation of robust owner occupier demand. This is despite the significant number of buyers who pulled forward their purchasing decision to receive the HomeBuilder Grant.
The high absorption of titled and near titled lots during the HomeBuilder Scheme has resulted in an increased weighting towards lots with a longer title time-frame. As a result, 50% of lots sold in May are projected to take over one year to receive title.
While Melbourne’s median lot price remained static at $319,000 over May, this followed considerable monthly growth of 4.6% in April, with fundamentals for additional lot price growth in place. This is encouraging investor demand, which is also responding to the shift in tenant preferences towards larger dwellings, mirroring that for owner occupiers. This is indicated in RPM’s buyer surveys which show investors share of all lot purchases increasing from 23% during the first three months of 2021 to 29% over April and May.
Subsequently, the Victorian lockdown from late May through to the early part of June, and forced estate sales office closures for two weeks across Melbourne and one week in Geelong, has so far resulted in little disruption to purchaser confidence. This is evident by enquiry and sales activity during the period largely continuing.