Melbourne Lot Sales See-Saw

The Victorian residential market wildly fluctuated over the quarter with the equal lowest and highest number of lot sales recorded between April and June.

According to RPM Real Estate Group’s review more than 50 per cent of the quarter’s 3,786 total lot sales across Greater Melbourne and Geelong occurred in June, of which 69 per cent were titled or near titled lots.

Figures topped out at 2,043 lots sold in June, the highest since November 2017, in contrast to a mere 654 lots recorded in April, the lowest since the market bottomed out in April 2019.

Meanwhile the apartment market had pronounced falls in approvals, at -36.9 per cent however townhouses only dropped -6.9 per cent, reflecting the growing popularity of this product type, particularly in greenfield areas.

RPM chief executive Kevin Brown said consumer confidence was rocked by Covid-19 in April before being thrown a lifeline by HomeBuilder in early June .

“During April we felt the crunch of social distancing restrictions, with a stark shift in spending patterns and wide-felt uncertainty across the workforce,” Brown said.

“Understandably, land sales stalled and the rental and apartment markets were heavily impacted too.

“Encouragingly, we saw lot sales steadily climbing to pre-pandemic levels through May, demonstrating underlying buyer confidence in Victoria’s property market, before activity really started escalating from early June with demand shifting notably to titled or near titled lots.”

More recent data from RPM revealed the upward sales trajectory in June has continued through July where 1,693 sales were recorded, the second highest monthly total for 2020.

Melbourne growth corridors lot sales

^Source: RPM Real Estate Group quarterly residential market review

ANZ associate director property Daniel Gradwell said while the fundamental housing picture was still relatively weak, the most recent quarterly data provided some light at the end of the tunnel.

“Even though Melbourne appears to be one of the hardest hit capital cities, we’re only seeing housing prices fall one to one and a half percent monthly at the moment–far from the extreme predictions many were making early in the Covid-19 crisis,” Gradwell said.

“A growth area to watch will be owner occupiers looking to downsize. This market has long-term potential given the number of baby boomers entering retirement, looking for smaller, quality properties with less maintenance.”

Regional areas were also a start performer in the RPM quarterly results with $50 million in transactions recorded with the group in Geelong, Ballarat and Bendigo far outstripping interest in the Melbourne Metropolitan area.

“Affordability will be a key driver of home buying decisions moving forward and we see prudent developers turning their attention to regional areas in greater numbers,” Brown said.

In further signs of life in the Victorian property market, international buyers have also re-emerged following the return of economic growth in China, with foreign buyers accounting for a near three-year high at 19 percent of new dwellings purchased.

“However, limits on migration will continue to impact the industry heavily, and without an indication of timing on border openings, it is extremely difficult to project how the recovery of the industry—particularly the investment and rental markets—will pan out,” Brown said.