News

Red23 Melbourne Growth Area EDM | Dec. ‘18

  • A year of change, with sales volumes slowing significantly and price growth finally grinding to a halt.
  • During 2018, sales volumes dropped by more than 40 per cent.
  • Median land price remained relatively stable in gross terms at $348,000, that said, rebates and incentives have been the norm.
  • The City of Melton recorded the strongest year-on-year price growth of just over 20%. Hume ended the year as the most expensive land market.
  • Berwick (City of Casey), is the most expensive suburb, with a median price of $470,000. Diggers Rest and Melton South (both in the City of Melton) are the most affordable suburb ($270,000 and $275,000 respectively).

 

It seems hard to believe, but as I pen this update, we are now well into 2019.

So, what did we take out of 2018?

Land prices finally peaked in the second quarter of 2018, at a record of $355,000.  At the time recording year-on-year growth of around 40 per cent.

This equates to rate of around $900 per square metre!

It has since tempered and finished the year at a more modest single digit growth of seven per cent, year-on-year growth.  Hume, with a median of around $380,000 was the most expensive land market.

Some 12 months ago in December 2017, the median growth area land price was $326,500.  This equated to yearly growth of close to $90,000 (an increase of around $240 per day).

In fact, the median land price rose in 11 of the 12 months during 2017.  In 2018, price rose in seven of the 12 months.  Movements in 2018 are shown in the following table.

The 12-month median land price was an astonishing $348,000 (average of $346,900).

Table 1

2018 Month-on-Month Land Price

  Median ($) MoM Variance
Jan-18 $329,500 $3,000
Feb-18 $346,000 $16,500
Mar-18 $350,000 $4,000
Apr-18 $355,000 $5,000
May-18 $350,500 -$4,500
Jun-18 $348,000 -$2,500
Jul-18 $345,000 -$3,000
Aug-18 $349,000 $4,000
Sep-18 $349,000
Oct-18 $345,200 -$3,800
Nov-18 $347,500 $2,300
Dec-18 $348,000 $500
Median $348,000 $1,400

Source: Red23 Research

Lot sizes fell to around 400 square metre across all growth area municipalities – a fall of around 48 square metres (11 per cent) in 2018.  Smaller lots now prevail and are preferred by purchasers.

Incentives emerged for the first time in a number of years and take the usual forma – rebates, landscaping and referral.  There are prevalent in every growth area municipality.

The annual auction clearance rate fell to below 60 percent.  Their lowest level since 2011.  Some weeks the clearance rate fell below 50 per cent.

While, established dwelling prices have fallen in Victoria by close to 10 per cent.

In summary, credit has slowed to both owner‑occupiers and investors, and foreign buyers have backed away.  The market has realigned.

In mid to late December a total of five precinct structure plans (PSP’s) were approved by the Planning Minister, which should lift the PSP Approved Supply from its lowest level since 2011 (around 11 years supply).

In fact, 2018 saw the most lots approved since 2014.


Chart 1

All Growth Areas, Net PSP Approved Supply

Source: Red23 Research

And finally, project sales volumes fell to below the short-term trend.

After project sales volumes peaking, north of 22,000, they fell to below 15,000.

This level is largely in line with volumes experienced in late 2014 / early 2015.  The median land price was some $150,000 below its current level (just over $200,000)!

As always, the aggregation of project sales data is not an exact science, and there is always a margin of error that needs to be considered.

The fall in projects sales throughout 2018 rates is best summarised in the following chart which shows project sales volumes in the first and last quarter.

The south east (Casey and Cardinia, 34 projects) fell by around 15 per cent, the west (Melton and Wyndham, 68 projects) by 40 per cent and the north (Hume, Whittlesea and Mitchell, 38 projects) by more than 50 per cent.

At a finer grain, the most significant fall was recorded in Wyndham and Whittlesea with falls of around 60 percent across the year (quarter-on-quarter).

All other municipalities, excluding Cardinia experienced declines of more than 40 per cent.  Notably, Cardinia record an increase, on the back of a significantly smaller project numbers (less than 5 projects).


Chart 2

Project Sales Volumes, Quarter Average | QI. ’18 vs QIV. ‘18

Source: Red23 Research

On the positive side, Victoria looks to be going from strength to strength.  The fundamentals remain largely sound.

Quoting a State Government press release:

Victoria is leading the nation with our unemployment rate the lowest in more than 10 years, the Australian Bureau of Statistics (ABS) confirmed today.

The latest ABS data shows Victoria’s unemployment rate in December 2018 is the lowest since August 2008 at just 4.2 per cent – the equal lowest rate on record for Victoria – and the lowest of all the states, and well below the national average of 5 per cent.

Over the year to December 2018, more than 120,000 people found work in Victoria – with nearly 90,000 full time jobs – making Victoria’s employment growth rate the highest in the nation.

In December alone, more than 10,000 jobs were created in Victoria – that’s nearly half of all jobs created across Australia (21,600) during that period.

Since the Labor Government was elected in November 2014, 438,000 people have found work in Victoria – more than anywhere else in the nation – with Victoria contributing more than a third of all jobs created across Australia.

As mentioned, the median land price is $348,000, up a modest $21,500 during 2018 (7 per cent).

Hume is the most expensive municipality with a median price marginally above the median, of $379,000 (up $1,000, month-on- month, and $16,000 year on year).  The median lot size was 448 square metres.

Casey, with a median of $371,700 is the second most expensive market, albeit falling by around $8,000 over the year.

Wyndham rounded out the top three most expensive municipalities, with a median of $348,000.

Mitchell remains the most affordable municipality, with a median of $285,000 – the only municipality with a median below $300,000.

Berwick (City of Casey), is the most expensive suburb, with a median price of $470,000.  Diggers Rest and Melton South (both in the City of Melton) are the most affordable suburb ($270,000 and $275,000 respectively).

In terms of year-on year price change, Melton’s growth of $55,250 (20.2 per cent) is the standout leader across the board.

Whilst Melbourne’s growth area land market tempers, Greater Geelong continues to thrive, recording a $6,100 month-on-month median land price increase to $278,000.


Table 2

Median Prices and Lot Sizes, Dec. ‘18

Ranking LGA Size (Sqm.) Dec. ‘18 YoY Change ($) YoY Change (%)
1 Hume 448 $379,000 $16,000 4.4%
2 Casey 401 $371,700 -$8,300 -2.2%
3 Wyndham 420 $348,000 $29,000 9.1%
4 Cardinia 375 $332,500 -$32,500 -8.9%
5 Melton 400 $328,250 $55,250 20.2%
6 Whittlesea 381 $324,000 $14,000 4.5%
7 Mitchell 444 $285,000 -$15,000 -5.0%
    400 $348,000 $21,500 7.0%

Source: Red23 Research

Red23 is a specialist marketing, sales and research partner for residential development businesses.  Our passion and expertise are for new and establishing projects in the areas of land, medium density and mixed used property developments in Victoria, New South Wales and Queensland.

Red23是一家负责居民住宅开发项目的场推广、销售及调研的专业伙伴.

们将热忱专业的知识服务于维多利亚、新南威尔士和昆士兰州包含土地、中密度住宅和商住混合地产领域在内的全新或成熟项目.

We believe in challenging the status quo of residential project marketing.

们有信心挑战居民住宅项目营销的现状.

No matter how big or small a residential project is, Red23 shares the same passion with developers in creating communities, places and homes where people want to live, grow and invest in.

论是大型还是小型的住宅项目,Red23将保持同样热忱协助开发商创建社区、地点以及人们向往居住、成长和投资的家园.

Red23 becomes an extension to our client’s development team and assist with tailored and nimble marketing and sales strategies and services based on timely and customised research.

Red23将成为我们客户所属开发团队的得力伙伴并协助他们根据实时的定制化场调研报告配搭灵活的市场营销和销售策略.

If you require any assistance with regard to the residential market, please do not hesitate to contact Andrew Perkins on (03) 9540 0477.

如果有关于居民住宅市场的任何帮助和需求, 与我们联系(03)9540 0477.