Melbourne and Geelong growth areas recorded a strong 2,620 gross lot sales in September, representing a 3% increase on August, with sales activity around its monthly average over the post HomeBuilder period.
Low borrowing costs, relative attractive affordability, and government initiatives supporting owner occupiers to purchase are all helping to sustain robust sales volumes and shield the new home market from the wider weakening in sentiment as the current outbreak grows and the lockdown continues. Diminished supply in establishing housing markets, as many vendors wait until inspections and street auctions are permitted again before placing their property on the market, may be inadvertently benefitting the new home market, as some demand shifts to the growth areas where supply of vacant lots has not been impacted.
Casey achieved the greatest monthly increase in activity, and more significantly, the gross sales figure of 502 lots was a new long term monthly high. This was only behind sales activity in Melton, which remains the most active growth area, recording 637 gross lot sales during September. Conversely, sales activity continues to trend downwards in Hume, with its 44 gross lot sales a near eight year monthly low.
Lot absorption continues to outpace new supply, with stock on the market at the end of September of approximately 3,000 lots being 7% below August. This has supported a further 1% rise in Melbourne’s median lot price to $330,000, while per sqm lot price growth has been stronger after the median lot size diminished by 2%.
As Victoria’s vaccination rate increases and the lockdown edges closer to ending, new home demand is expected to be boosted as the state reopens. This will be supported by the opening of estate sales offices to allow customers on site for face-to-face meetings and the ongoing favourable lending environment still encouraging purchasers to enter the market. Moreover, unless land supply picks up noticeably, it is likely that further upwards pressure will be placed on lot prices as we move through the final quarter of 2021.