House and land package sales across Melbourne are closing in on pre-Covid-19 levels following the introduction of the Home Builder grant, figures from real estate group Red23 show.
Melbourne’s greenfield market—the country’s biggest by some margin—has been hard hit throughout the pandemic, with the majority of its growth corridors experiencing a drop in sales in recent months ranging between 42 per cent and 75 per cent compared to February.
Now into the fourth month of lockdown restrictions, developers have battled subdued sales levels, with inquiries across eight Melbourne and Greater Geelong growth corridors resurgent.
According to Red23, the Cardinia growth corridor experienced the biggest drop in sales across March, April and May with sales dropping 60 per cent, 75 per cent and 58 per cent respectively against February figures.
Apart from Cardinia and Greater Geelong, the decline lessened in May, with 16 per cent fewer sales than February 2020.
Both Whittlesea and Mitchell saw increases in sales volume, with an increase of 9 per cent and 4 per cent respectively.
Melbourne land market sales
|Municipality||Mar ’20||Apr ’20||May ’20||Feb-Mar Difference||Feb-Apr Difference||Feb-May Difference|
^ February - May 2020. Source: Red23
Red23 found that 10 per cent of projects across the growth corridors adjusted their list prices since February, ranging from -3 per cent to 3 per cent on February’s prices.
Projects within Casey saw the biggest price reductions across March, April and May, amounting to -2.0 per cent, -1.3 per cent and -3.4 per cent respectively compared to February.
Hume, in the north, and Whittlesea returned slight price increases across these three months.
“Although there has not been a great movement in pricing, we have seen the emergence of substantial rebates and promotions being offered across approximately 80 per cent of the greenfield projects,” Red23 managing director Terry Portelli said.
“Combining this with incentives from builders and government stimulus packages, new home buyers are obtaining savings well over $60,000.”
Titled lots made up 22 per cent, or 4,000 lots, in 2020, from a low of 3,215 in December 2019, due to a number of new projects entering the market.
Melbourne land market pricing
|LGA||Mar ’20||Apr ’20||May ’20||Feb-Mar Difference||Feb-Apr Difference||Feb-May Difference|
^ February - May 2020. Source: Red23
The Home Builder stimulus package, announced on June 4, has delivered an immediate boost to some land developers and home builders following curbs on activity from restrictions on open inspections and auctions because of the pandemic.
“The first week in June saw the introduction of the $25,000 Home Builder scheme which resulted in a rush for titled lots,” Portelli said.
“We are currently seeing weekly sales volumes 30 per cent up from the beginning of May, similar to pre Covid-19.”
The researchers said that cancellations had also increased dramatically as buyers’ personal situations changed during stringent lockdown measures, with 20 per cent of buyers withdrawing from previous agreements.
Prior to the coronavirus crisis, Melbourne’s land market was already in weak territory.
Leading into lockdowns research by another real estate firm, RPM, found that more than a third of all Melbourne housing lots advertised online following the two-year housing downturn were re-sales by buyers who couldn’t access financing, or speculators trying to flip sites prior to settlement.
“Although we saw the market start to recover during June, we understand this has been on the back of government stimulus packages and the hard work that developers, builders and sales agents are performing in nurturing customers through the sales process during Covid- 19,” Portelli said.
“We are now looking ahead to how post-September 2020 will look for the market as government stimulus packages are wound back, [considering] the uncertainty of particular industries, unemployment and the lending criteria for those who are in a position to purchase.”
Hero image: Artist impression of True North, Greenvale