Entry level home buyers in Melbourne are facing another hurdle with a sudden spike of steep rises in lot values. It’s threatening Melbourne’s position as Australia’s most affordable capital city housing market and adding to first-home buyers affordability problems.
Values rise $300 a day
Data just published by project marketers Red23 reveals Melbourne’s median price for land lifted by $300 a day during March 2017 going up to $258,000. That’s a $9000 rise in just one month. This lifts the overall cost of a new 3 or 4 bedroom home to about $500,000.
The jump in values during March means Melbourne’s median lot price has risen 8% during the first quarter. This is twice the growth rate of established houses during that same timespan.
New supply quickly absorbed
Red23 research spokesman Andrew Perkins says population growth is the driver with demand for 22,000 dwellings each year. Recent increases in supply have been met with strong sales volumes.
The hottest spot for rising lot prices in March was Hume in Melbourne’s north with a 10.3% increase ($26,000) sending the median price there to $278,000.
This area includes fast growing Craigieburn where developer Stockland has ‘Highlands’, one of its largest estates.
Most expensive new housing suburb in March was Point Cook where the median lot price is now $367,000. At $366,000, Lyndhurst was close second in the outer south east.
According to the UDIA (Urban Development Institute of Australia) 2017 ‘State of the Land Report’ although 22,700 lots were released in Melbourne in 2016 (40% of the National total) lot prices still rose 11%, reaching a $237,000 median. The UDIA determined that there was just 4 weeks supply of trading stock available to the market at the end of 2016. The lowest level in 6 years.
Need for reduced taxes and imposts on new housing
In the Institute’s report UDIA national president Michael Corcoran stated an urgent need for Melbourne, Brisbane and Sydney to increase supply, in locations that were accessible. And recommended that governments reduce taxes and imposts currently applied to new housing so stock can be delivered at a price that’s affordable.
The Victorian State government is attempting to fast track approval for new suburbs, or PSPs (Precinct Structure Plans) via the VPA (Victorian Planning Authority). 5 new suburbs have been approved in the 6 months to Feb 2016. The government’s target is the release of 100,000 new house lots before before the end 2018.
If you’d like more information about lot development or townhouse construction in Melbourne, SAW Constructions are pleased to help. Call (03) 9550 0700.