Land sales surge despite lockdown

Victorians splashed their cash during months of stage four lockdown, buying the most land in a quarter since mid-2018.

New figures from RPM Real Estate researchers show a hefty 4566 blocks of land were bought across Melbourne and Geelong growth corridors from July 1 to September 30 this year.

The firm, which captures sales for about 40 per cent of the greenfield market, has calculated 60 per cent of these were buoyed by the federal government’s $25,000 HomeBuilder grants.

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But despite forecasting the final three months of 2020 could end with even more sales after 2057 were reported in October, the end of the stimulus program on December 31 will put the Victorian construction industry’s about 240,000 jobs in the hands of families.

RPM director Luke Kelly said homeowners looking to upsize to a new home were likely to have held off in 2020, despite the government money on offer, as they waited for more certainty in the established property market after it was effectively paused from August until September 28.

“They need confidence they will get what they are told they will for their home before they start a new home build process,” Mr Kelly said.

It is believed first-home buyer demand has largely been brought forward from next year by the HomeBuilder offer of $25,000 for a new home priced at or below $750,000 when build contracts are signed before December 31.

Treasury figures show 7636 applications had been registered in Victoria by November 20, with 6237 of these for a new home and about 1400 for a renovation worth between $150,000 and $750,000.

Nationwide, almost 24,000 applications have been received, with the government projecting it would pay approximately 27,000 grants when the program was announced on June 4.

Mr Kelly added that as a growing number of building commitments were cemented, the stimulus package’s legacy was shaping up as a 400sq m block with a 185sq m three-bedroom single-level house with a double garage.

However, he said HomeBuilder had now functionally reached its end as volume builders would not be able to get new contracts finalised by December 31, with the exception of townhouses and modest pre-designed homes with limited scope for change.

The 40 per cent of sales recorded in the latest data that were not eligible for HomeBuilder grants indicated land would continue to sell in 2021, but also that buyers would favour smaller, 392sq m blocks, with prices about $15,000 below those sold this year.

“Post-COVID-19 we will probably see block and property sizes skew down,” Mr Kelly said.

“But there will be larger lots leftover, waiting for second and third-home buyers to come back.”

It’s also expected more buyers will look to regional estates, where up to $20,000 in grants are on offer from the state government for first-home buyers and land prices are significantly cheaper than those in Melbourne.

In the most recent figures, the city’s west accounted for more than a third of the sales, with 1689 patches of dirt snapped up. There were 1145 sales in northern suburbs estates, which surpassed those in the southeast where 1083 were reported.

While land sales in the Geelong region more than doubled from the previous quarter to 649, a $10,250 increase brought its median lot price to $289,500 — just under $5000 below Melbourne’s cheapest growth corridor, the north, where a typical block came down in value by $7300 to $294,700.

However, Geelong blocks remain almost 50sq m bigger than the 400sq m average in Melbourne.

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