Victoria’s Greenfield Market ‘Bottoms Out’

Victoria’s greenfield developers have been tilling the soil in a tough market after its runaway success during the pandemic. 

And while there has been a market correction playing out, it is scraping the bottom of the cycle now, according to Oliver Hume chief executive Julian Coppini. 

The residential land market was hanging tough in terms of monthly sales volumes but “we believe the market has reached its bottom or is very close to it”, Coppini said.

“Gross prices are continuing to moderate from recent highs across both metropolitan and regional markets in Victoria. Net prices are also on the decline, with incentives and rebates becoming more widespread,” he said. 

“New releases and increased availability are pushing prices down as more stock enters the market.”

But it’s not just oversupply in new estates that is adding to the oversupply. Coppini said Oliver Hume was also monitoring the “significant volume” of resale inventory with thousands of lots on the block. 

“Clearing this resale inventory is crucial before market confidence can return and the recovery of sales activity. We expect this to be initially driven by investors and builders, with retail buyers following later, contributing to the absorption of the resale stock,” Coppini said. 

“We are seeing increasing evidence that Victoria is becoming more appealing to investors and builder groups, particularly as other Australian states have experienced significant and unprecedented rises in median house prices.

▲ Oliver Hume chief executive Julian Coppini believes the state’s greenfield market has bottomed out.

“Despite the near-term challenges, the outlook for the new home market remains more positive.”

Coppini said the market outlook was demonstrating some green shoots with an expectation that the pull-forward of HomeBuilder sales would unwind in the next 12 months, which he said would improve the supply-demand imbalance. 

Tight vacancy rates, which has dropped back down to 1.34 per cent nationally in September, and limited building approvals data could also lead to an improvement in communities. 

The latest PropTrack Market Insight Report has revealed that the national vacancy rate fell for the third straight month in September, dropping 0.06 percentage points. Melbourne recorded a very modest rise in listings of 0.01 per cent. 

“Strong rental growth, and Melbourne’s affordability advantage will also support the market's recovery,” Coppini said. 

Meanwhile, the state’s regional vacancy rates were significantly tighter with North West (0.53 per cent) and Warrnambool and South West (0.57 per cent), both in regional Victoria, recording some of the lowest vacancy rates in Australia.