Demand for new land in and around Melbourne continues to grow at record levels with new blocks now selling in less than 50 days, down from nearly 200 days at the end of 2013, according to research by property group Oliver Hume.
The average price for a square metre of new land in Melbourne in the first quarter of this year (three months to March) was nearly $640 up from $575 in the last three months of 2016.
The research, compiled from analysing thousands of transactions, the stock of lots available and examining trends in projects throughout Victoria, shows the average time on market for land in Melbourne in the first quarter of 2016 was just 1.6 months, the lowest ever recorded.
The median price of land in metropolitan Melbourne reached $262,000 in the first quarter, up 9.6% (or $23,000) from $239,000 in the last quarter of 2016. Over the same period the median lot size declined from 416 square metres to 410 square metres.
With the exception of the first quarter of 2015, the average time on market has now fallen or remained steady in every quarter since the third quarter of 2013, after peaking in the current cycle at 6.6 at the end of 2012.
The statistic measures the period from when a piece of land is released for sale by a developer until it is contracted by a purchaser.
Oliver Hume Research Manager George Bougias said the total number of sales across January, February and March were all significantly up on the same period last year.
“Continuing supply, robust competition and relative affordability compared to many other property markets in Australia means Melbourne residential land is still one of the strongest performing asset classes in Australia at the moment,” Mr Bougias said.
“We expect the market to continue to build momentum throughout 2017 if not well into 2018.
“With buyers having similar access to low interest rates, an improving economic and jobs outlook in Victoria and Melbourne’s relative affordability is ensuring the city keeps coming up the winner,” he said.
Recent State and Federal Government initiatives aimed at supporting first home buyers represents another factor that will drive the market.
Oliver Hume Director Paul Ciprian said land was attracting a wide variety of buyers including first home buyers, investors and value hunters from Sydney.
“Over the last couple of years we have seen an ever-increasing number of people priced out of the Sydney market looking to set up their life in Melbourne,” he said. “If your job and family is transferrable, the decision is pretty simple.”