Greenfield sales across Victoria slumped last quarter as affordability and servicability constraints dug deeper.
According to RPM Group, sales in the state fell 6 per cent in the third quarter after a 13 per cent increase the previous quarter.
RPM said demand for new property was likely to remain subdued in the immediate future due to those constraints.
Consumer sentiment remained poor after 13 interest rate rises since May of last year, it said. Borrowing capacity was down 30 per cent.
The RPM data showed uust 1538 lots were released in the third quarter, down 17 per cent on the previous. The average time that lots spent on the market rose to five months—a three-year high.
Despite this, Melbourne’s median lot price rose slightly by 1 per cent to a record of $389,000. The median lot size fell to 354 square metres.
RPM chief executive Gary Dunne said increased enquiries for greenfield properties underscored the expanding affordability gap between the established and greenfield land markets.
“Prospective buyers are seeking solutions to affordability and serviceability constraints, such as considering locations further from the city or exploring smaller lots with a more compelling product mix,” he said.
Dunne blamed proposed changes to government policies for introducing an element of uncertainty for investors.
“The viability of the greenfield property market hinges on quick decision-making and the release of land to meet not only existing demand but also to accommodate growth in Melbourne’s corridors and regional centres,” he said.
Dunne described the regional established housing market as “in a state of flux”.
“There is limited supply coming on to the market and demand has also waned due to the high price levels,” he said.
“This is supported by prices remaining unchanged during the third quarter and being 1.3 per cent below the levels of the same quarter last year.”
RPM general manager for research, data and insights Michael Staedler warned total lot sales were anticipated to contract further during the next two quarters, influenced by the seasonal impact of the holiday period.
“New home demand is expected to also remain fragile throughout 2023 and into 2024 in response to ongoing volatility in the Victorian property market and the broader economy eroding confidence and sentiment,” he said.
