LAND FEVER EXPLODES IN SYDNEY, DARKNESS IN MELBOURNE

Land sales in Sydney’s new precincts have surged 26 per cent in the past few months, while in Melbourne and Geelong, oversupply and high borrowing costs have sent land sales plummeting to an 11-year low.

The state government’s various incentive policies for new home buyers, real estate packages, and cost of living pressures are widening the gap between the two largest markets on the East Coast. 

In Sydney, land supply has become limited after land sales were squeezed during the global pandemic. In Melbourne, by contrast, a lot of land is for sale but owners face a number of land taxes that reduce price growth. High interest rates and living costs are the reasons for reduced demand.

RPM National Group’s latest Greenfield Victoria Market Report for the fourth quarter of 2023 shows the number of new land sales falling to 1770 lots, 12% lower than the same period in 2022, which is the lowest level since 2012.

Over the past year, 7,839 new plots of land were sold, marking a 46% decrease compared to the previous 12-month period, when 14,602 plots of land were transacted.

RPM National marketing director Luke Kelly shared that although the end of the year was difficult, buyers enter 2024 with improved confidence. 

“Buyers are in the mindset that they will get a good deal after negotiations, so an extended restriction period will benefit the buyer,” Kelly said.

“Developers are continuing to offer incentives of 5 to 10 percent, saving an average of about $30,000, and with a selection of registered plots, buyers can choose a home location and start building immediately.”

In contrast, Research4 data shows Sydney home sales in the December quarter were around 500 units, up 26 per cent from the previous three months and 24 per cent higher than the previous year.

Colin Keane, whose consulting firm Research4 tracks land sales nationwide, said Sydney has had a correction after the COVID-19 pandemic, with land prices remaining very high. “Sydney land sales improved by 22 per cent year-on-year and prices remained stable,” he said.

He said Sydney had experienced an “affordability shock” when the pandemic ended but prices remained a “challenge because customers are under financial pressure to buy a home, but it gets harder as interest rates rise”. 

Stockland, the country’s largest developer of homes and land, said last week’s financial results demonstrated higher settlement numbers driven by its master-planned community business.

Group CEO Tarun Gupta reaffirmed full-year settlement trading at 5200 to 5600 lots, which is likely to fluctuate in the coming months.

“Early indications are that sales volumes are expected to improve in New South Wales but housing growth is moderating due to ongoing affordability constraints,” he said.

“In Victoria, the recovery in sales is expected to be slower than other states, while housing market price growth is expected to remain modest.”

RPM’s Kelly shared that in Melbourne there were signs of increased sentiment and sales during the four months to October as interest rates remained stable.

Source: https://www.theage.com.au/