Melbourne Land Sizes Fall As Prices Stablise

Melbourne is facing a deepening housing affordability crisis with new data showing lot sizes and availability have decreased during the past 12 months. 

Red23’s land market data shows that while house prices have remained stable across most of metropolitan Melbourne, the actual size of land and how much is availabile has declined.

Meanwhile, prices are up 66.4 per cent in the Greater Geelong area. 

The data shows that there were about 1000 lots on the market at the end of February across Metropolitan Melbourne and Greater Geelong.

Melton has the highest land availability of the region but is quickly absorbed—and is only a quarter of what was available 12 months ago.

Median land price increased across four municipalities and in Greater Geelong while the metropolitan land price remained much the same.

Greater Geelong’s median land price increased by 38.7 per cent while its median land size increased from 400sq m to 457sq m.

Cardinia’s median land price increased 5.8 per cent and its median land size declined slightly.

Average land prices declined month on month from January to February in Casey, Melton, Wyndham and Mitchell.

Whittlesea and Casey showed the next highest growth in average land prices compared to last year.

Average land size and price: Melbourne, Greater Geelong

 ^{^Source: Red23 Land Market Update}

Price reduction requests were highlighted in the Red23 report along with a slowdown in interest in buying in Melbourne’s inner and middle rings.

Red23 managing director Terry Portelli said investors are still active while first home buyers are being priced out, with a gradual decrease of 3 per cent in first home buyers in the last 12 months while investors remain 6 per cent lower than 2021’s figures. 

This has led to developers trying to encourage more first home buyers into the market by capping the number of investor sales and reducing deposits from 10 per cent to 5 per cent. 

ABS lending indicator data showed that Victoria’s total home lending numbers had dropped by 7.2 per cent in February.

▲ Land sizes have decreased while prices have remained the same with many first home buyers feeling priced out of the market in Melbourne's metropolitan areas.

Corelogic data reported a 5.5 per cent increase in advertised stock in Melbourne on last year.

Corelogic’s recent report also said that despite a decline in growth in Sydney and Melbourne, national house prices had increased by 2.4 per cent or by $17,000.

Corelogic research director Tim Lawless said new listings on the market and increased buyer demand were key.

“With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat,” Lawless said.

“That means more time to deliberate on their purchase decisions and negotiate on price.”

The federal government’s latest budget report outlined several initiatives to tackle the issue of housing affordability with an expansion of guarantees for home loans with low deposits and the government as guarantor announced across three different schemes. 

Property industry groups said the federal government had missed several opportunities to really tackle the housing affordability crisis.