Real estate: Victorian growth areas land sale slump is good news for 2023 buyers

Developers might begin offering incentives to new home buyers in the new year.

A land sales slump is building a case for Victorian buyers to score bonuses for their dream home this summer.

But with added costs from a shift in the nation’s construction codes on the horizon, they’ll need to be getting themselves into a position to make a move by January to get the best deal.

Recent RPM Group figures for the September quarter show vacant lot sales across Melbourne and Geelong’s greenfield development sites fell 41 per cent to 2695.

The firm’s latest market report also showed the median price for a block of land fell slightly from the June quarter to $376,000, though the size of the typical block decreased to a 350sq m record low.

The Bacchus Marsh growth corridor is currently offering the best bang for buck, with a typical block size of 538sq m costing $350,000. It has made estates in the area like Stonehills popular with many buyers across the year.

The $415,000 cost of a standard block in Melbourne’s state’s south east made it the least affordable.

However RPM project marketing director Luke Kelly said after three-monthly sales numbers across Melbourne and Geelong’s new estates peaked at 7800 during 2021, the current numbers were below the 2800 recorded near the end of the last market trough in 2019.

“We will hit rock bottom in the December to March timeline, and then once again we will be on that incline up to the end of next year as migration comes back,” Mr Kelly said.

He noted that while current sales were below typical norms, the reality was that this was because buyers were holding off as a result of interest rate rises — and that many would soon purchase a house and land package as growing families or lifestyle needs forced them to.

New homes typically maintain a base line of sales and construction as family growth forces at least some people to upsize despite wider market and interest rate movements.

This was likely to coincide with a rise in consumer sentiment, with the Reserve Bank of Australia widely expected to stop raising rates during 2023.

“So from the middle of next year or the end of next year, we will see some improvement in land sales,” Mr Kelly said.

“But there could be some opportunities for buyers in the few months of next year.”

He added that he had already seen some developers offering $10,000 incentives to buyers in the form of landscaping and other value adds, something he expected would become more prevalent when the industry returned from a summer break in mid January.

However, buyers holding off further into next year would become increasingly likely to be required to build a seven-star energy efficient home — which could add $15,000 to the cost of some builds.

Energy efficient homes like this nine-star NatHERS rated home at Cape Paterson typically cost more to build, but achieve lower energy bills. Image: Australian Ecosystems Pty Ltd.

RPM group manager of research and data Michael Staedler said while upgrading homeowners had picked up in their activity in recent months, first-home buyers were seemingly holding back as they grappled with their lender to “work out what their purchasing power is”.

Nathan Mawby, Property journalist. source: realestate.com.au