Developers to Mine Melbourne’s ‘Cheap’ Growth Corridors

Melbourne’s growth corridor suburbs are some of the cheapest to deliver on a cost-per-lot basis on the eastern seaboard, according to new data. 

The Colliers report shows in 2023 the cost per lot for delivery of greenfield stock was $116,582 on average, which was a growth of 3.5 per cent in costs on the previous year. 

But it was significantly cheaper when compared with the average cost per lot in NSW, which was $170,899 and in Queensland $157,833. 

Colliers Engineering and Design director Chris Gallaugher said that although the data varied across the growth corridors, the year-on-year cost increases had abated as supply-chain issues and labour demand had normalised. 

“Our report highlights that the costs across municipalities varies due to a number of factors including subsurface conditions, topography and the statutory fees and charges applicable within that council’s specific precinct structure plan,” Gallaugher said. 

Average Costs Per Lot | December 2023

*Source: Colliers

The report states that Victoria had reached the tail end of peak demand in the history of the state, where the average number of lots delivered was almost doubled to 30,000 last year. 

Interest rates had peaked and were expected to fall within the year where consumer sentiment would return, aided by migration, Gallaugher said. 

“Now is the time to engage in value engineering and undertake initiatives for revenue uplift that may have been overlooked in the rush to get product to market. 

“Despite en globo land prices and vendor expectations remaining elevated, now is the time to capitalise.”

Gallaugher said immigration would drive demand for an additional 800,000 homes in the next 10 years, which is expected to require 24,000 greenfield lots a year, well above the historical average of 16,000 lots. 

According to Oliver Hume data, the average price of a lot rose 1.4 per cent in 2023 to $398,000, while the average lot in south-east Queensland was $355,000. 

Oliver Hume has forecasted that volumes would moderate as prices were expected to recover with a return to normal conditions next year.