Geelong’s new house blocks are still priced at $275,000 as greenfield developers in the Melbourne and Geelong growth areas record dropping demand in the market.
The bleak condition was driven by external factors such as buyers’ ability to get loans, concerns that lot prices were too expensive, and negative sentiment amid the housing downturn, according to the RPM Real Estate Group report.
Data showed that nearly 300 new house lots were sold in the Geelong corridor during the March quarter— down by 553 compared to the same time last year.
The median lot price of $275,000, meanwhile, was 14% higher than the same time in 2018 but was unchanged in the last three months.
The Geelong market was beginning to make noise last year after the state government doubled the regional First Home Owners Grant, according to a report by realestate.com.au. At the same time, buyers turned to Geelong as prices peaked in Melbourne.
The report also found that developers reduced new land supply by 55% in 2019. In addition, Geelong’s growth areas are home to the cities’ cheapest land. A 400sqm lot costs $230,000 on the Bellarine Peninsula and $252,000 at Armstrong Creek. The cheapest Melbourne land is $255,000 at Melton South.
The affordability advantage and steady supply of land in Geelong helped developers maintain their lot prices, according to RPM Head of Communities Luke Kelly.
The average lot price in Armstrong Creek declined by 3% to $265,000. Prices in Lara, Geelong, and the Bellarine Peninsula, on the other hand, rose.
“In Geelong, although we’ve seen like in any market that is has dropped for external reasons, the prices have held up, and there is no real rebates or incentives,” Kelly told realestate.com.au. “That’s off the back that it’s sitting at $265,000, if you use Armstrong Creek as an example, versus $325,000 (in Melbourne). It comes back to what can buyers afford and what they can’t afford. In Geelong, based on household incomes, they can still afford it.”
The predicted interest rate cuts and planned APRA changes could encourage buyers to build during the year.
“It’s good for people entering the market — there is some confidence for them to enter into the market and get the money that they need to get things done,” Kelly told realestate.com.au.
Investment activity also slid across the sector in March, but certainty around tax policy after the federal election should attract buyers to return.
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