News

Red23 Melbourne Growth Area EDM | Sep. ‘18

 

  • Melbourne’s median growth area land price has stabilised at $349,000, unchanged over the last 30 days.
  • That said, over the last 365 days, the median land price has increased by 16.6 per cent or around $45,350.
  • The City of Hume is the most expensive land market at $375,000
  • Enquiry levels are tempering, incentives are emerging: as are 5 per cent deposits
  • While activities are tempering in metropolitan Melbourne, regional markets such as Greater Geelong’s continue to shine: YoY price growth of around 33 per cent.

As mentioned on a number of occasions in this communication format, while the broader economic fundamentals remain sound throughout Victorian (population growth, employment growth, relative affordability), signs are emerging that the market is tempering.

Auction clearance rates over recent months continued to fall and are now into the mid to low 50 per cent bracket: the long run average is around 70 per cent.  This time last year, auction clearance rates in metropolitan Melbourne were around 73 per cent.

Dwelling prices continue to moderate, albeit not as much as or north capital city neighbour.

Over the last 12 months, Melbourne’s median dwelling price has fallen by 3.4 per cent to around $698,000.  Sydney’s median dwelling price has fallen by 6.1% to around $848,000 (Source: Corelogic).

House price expectations are weak. The ‘time to buy a dwelling’ index continues to fall.

In terms of the growth areas, absorption is slowing: sales rates are easing.

In the last quarter of 2017, the percentage of lots released in that quarter that sold, was around 67 per cent.

That percentage fell to around 59 and 52 per cent in the first 2 quarters of 2018.  Only around 31% of lots sold that were released in the September quarter.  On median, over the four periods, around 55% of lots have sold in the quarter of release.

Table 1

Percentage of Product Sold 90 Days After Release

Municipal stock level across all growth area have risen over the last 12 months with the most significant increase in Casey.

Over the last 12 months, availability in Casey has risen by around 13 per cent.  All other markets experienced a fall in available stock, most notably Melton which fell by around 6 per cent.

Wyndham remained unchanged over the period.  Cardinia remains the tightest market in terms of stock levels, Casey the healthiest.

Table 2

Available Stock by LGA

So how did we finish up at the end of quarter three 2018?

The September median land price remained unchanged over the last 30 days at $349,000: prices have largely fluctuated around $345,000 to $355,000 over the last six months.  Peaking in April at $355,000 this year.

Hume is the new leader in the median land price ladder at $375,000, overtaking Cardinia which held the pole position as the most expensive land market since January of this year.

Cardinia hasn’t simply just lost its ‘pole’ position on the ladder, it has remarkably dropped from first to sixth in the space of a single month with its median land price dropping $70,000.  In part, this can be explained due to a new release of around 50 lots that sat well below the median (median of $275,000, 316 sqm.).

Casey was the only municipality to show a decrease in median land price over the past 12 months, a $4,000 decline from September 2017.  In saying this, Casey had the highest month-on-month increase in price at $5,000 or 1.4 per cent.  It continues to be well supported in terms of stock (as it has proven to do so for many months now).

Following on from Melbourne’s median land price remaining the same as August’s figures, Whittlesea and Mitchell followed this trend by not showing any signs growth or diminishment throughout September.  This suggests that the neighbouring northern municipalities have reached an equilibrium and may continue to this consistency in land price for months to come.

Melbourne’s year-on-year median land price for September has increased by a pleasant 21.1 per cent.

Although this increase appears great at first glance, when compared to last year’s September year-on-year growth of 38.2 per cent, it clearly illustrates the current slow in the market we are facing.

There are currently 140 trading projects across the seven growth area municipalities (as a comparison, there were 126 at the end of September 2017 and 140 at the end of 2016).

Table 3

 

It’s worth noting, Greater Geelong’s current boom in the market has clearly out performed Melbourne over the past year as it has grown by over 33 per cent, which is actually the highest month-on-month percentage growth out of all seven municipalities.  The dollar per square metre sits at around $680.

While established house prices are strong: greater Geelong ($528,000, +11.2% Year-on-Year: +1.5% Quarter-on-Quarter), Armstrong Creek ($497,500, +10.6% YoY: +6.5% QoQ) and Curlewis ($459,000, +11.8%: +4.3% QoQ).

 

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