Red23 Melbourne Growth Area EDM | Mar. ‘19

Median Land and House Price Ratios | QIV. ’12 - QI. ‘19
  • Gross median land price stalls at $337,000 for 2nd consecutive month.
  • Median land price of new stock was $326,500, noting that less than 10 per cent of stock released sold.
  • More than a third of all projects delivered a zero sales rate!
  • Median project sales rates are still a concern, with a median of around 2 sales per project.
  • Median rebate was around $15,000: confirming a net median land price of $322,000

And so that concludes the first 90 days of 2019.

I’m not sure if I will enjoy penning this document over the coming quarters as it is now widely accepted that the sector is in for an extended period of realignment.

Back to what many would suggest is a more balanced and palatable market.

Over the last 12 or so months sales volumes have fallen from more than 20,000 to a forecast this year of less than 8,000 on an annualised basis (levels last experienced in early 2014).

Land prices have tempered from a record peak of $355,000 in April last year to $337,000: still around $110,000 above the peak in the land cycle of around $227,000 in mid- 2016.

Rebates have continued to escalate.

Thankfully, ‘cancellations / terminations’ remain in single digits.  It is accepted that this figure will increase.

Established house prices have reach the low 800,000’s.  Melbourne’s tempering follows five-year price growth from 2012 of around 73 per cent, a median of $909,405 in late 2017 (visit –

There has been much discussion over recent months on whether land prices have bottomed out and if not, how much further they will fall.

The relationship between the median house price and the median land price is one way of attempting to establish where the land price cycle currently sits – and more importantly where we can expect it to go.

At the end of the March quarter 2019, the median land price equated to 42 per cent of Melbourne’s median house (Source: REIV).

The figure / ratio was 29 per cent when prices began to increase in the second half of 2015 (when the median land price was in the low $200,000’s): rising to a peak of 44 per cent in the last quarter of 2018.

Over the longer term, the ratio has averaged 33 per cent.  Over the shorter period, the ratio was 35 per cent.

If we moved back to the long-term percentage (with the median house price stabilising around its current level), the median land price would move to an unlikely $260,000.  If it moved in line with the three-year ratio, the median land price would move to $277,000 (a $90,000 fall from its 2018 peak).

Prices were last in this range in the second quarter of 2017.  I don’t expect land prices to adjust downwards to this degree.

Prices are currently down around 5 per cent on a gross basis and around 9 per cent net ( visit –


Chart 1:

Median Land and House Price Ratios | QIV. ’12 –  QI. ‘19

Median Land and House Price Ratios | QIV. ’12 - QI. ‘19
Source: Red23 Research


Of course, the number of trading projects has a direct impact on the land price also.  See also,

Many, as I did, expect the number of trading projects to rapidly head north and reach 200 by now.  There are currently around 140 trading projects across the seven growth area municipalities.

On average over the last three and a half to four years, the market has been afforded 136 trading projects.  The number has fallen over the shorter term to only 126 trading projects, on average.

I do expect this number to rise over the coming years.  That said, consideration does need to be given to the availability of finance to some developers; which may temper this rate of escalation.



Chart 2:

Project Count | QII. ‘15 –  QI. ‘19

Project Count | QII. ‘15 - QI. ‘19
Source: Red23 Research


So, to the broader picture.

Over the course of the past two months we have seen just $1,000 difference in the median land price. It is currently $337,000.

Some 12 months ago, the  median land price tipped over the $350,000 mark in what was nearly the epitome of Melbourne’s greatest property market boom.

Fast forward 12 months from then and we are currently facing an entirely different market, with low sales volumes, up to $45,000 worth of incentives on lots and a net median land price which is slowly but steadily working its way down.

The median land price of new stock was $326,500, noting that less than 10 per cent of all stock released in March sold.

In regard to the highest performing municipalities, Hume remains on top ($363,000) for the sixth consecutive month on a median price ladder that has shown very little movement at all amongst the municipalities in recent times, largely due to the stabilisation in the market which is occurring.

Apart from Melton, Hume is the only municipality that has managed to hold its median land price since the downfall from April 2018, having only a 0.1 per cent year-on-year difference.

Although the majority of municipalities have gone down in median price over the past 12 months, growth regions Cardinia, Mitchell and Casey have suffered the most.

This time last year Cardinia had a median land price of $95,000 more to that of which it is now, as it currently stands at $335,000.

That being said, Cardinia’s ongoing lack of stock and its 53 per cent reduction in median land size can explain these abnormal figures.

The median lot size for all conventional lots remains at 400 square metres; which it has been for several months. This is down nearly 11 per cent from twelve months prior when the median lot size was 448 sqm.

Lot sizes for all seven municipalities have reduced from Mar. ‘18, with Cardinia showcasing the largest fall of 47 per cent from where it was last year and Whittlesea having the least change with just a 1 per cent year-on-year difference.

Sale volumes continue to struggle, with projects this month on average selling under 2 lots.  An alarming figure, the number of projects that were unable achieve a single sale in the month of March (approximately 40 per cent of all projects).

Rebates, incentives and discounts are running rife amongst Melbourne’s GA’s land market with the majority of projects offering some sort of ‘bonus’ in an attempt to attract more buyers in this challenging current property market.

Out of those offering, on average there is $15,000 offered to buyers in some form of deduction bonus, with some offering up to $45,000 in total.

For the first time ever, Greater Geelong has surpassed one of Melbourne’s GA municipalities in Mitchell. Greater Geelong has produced a  median land price of $292,000 which places it $2,000 higher than Mitchell.  Geelong’s property and land market has continued to remain strong and reliable.


Table 1

Median Prices and Lot Sizes | Mar. ’19

Ranking LGA Size (Sqm.) Mar. ‘19 YoY Change ($) YoY Change (%)
1 Hume (N) 432 $363,000 $500 0.1%
2 Casey (S) 400 $350,000 -$25,000 -6.7%
3 Wyndham (W) 400 $338,000 -$15,000 -4.2%
4 Cardinia (S) 357 $335,000 -$95,000 -22.1%
5 Melton (W) 396 $325,000 $9,000 2.8%
6 Whittlesea (N) 392 $320,000 -$10,000 -3.0%
7 Mitchell (N) 448 $290,000 -$43,000 -13.0%
    400 $337,000 -$13,000 -3.7%

Source: Red23 Research


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