THE downturn in Victoria’s new land market has impacted Geelong with higher prices and credit-induced headwinds slow buyers taking up new homes.
Greater Geelong growth corridors contributed nearly 15 per cent of the overall Melbourne major growth area market in December, a 38 per cent drop from the same time last year as a flood of new buyers washed through the market when the State Government doubled the regional first-home buyers grant to $20,000, the RPM Real Estate Group’s quarterly Residential Market Review showed.
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The report showed emerging affordability concerns, with the median lot price rising 8 per cent in three months in the Geelong sub-market, which includes Fyansford, Highton, Lovely Banks and Wandana Heights.
But price growth was more marginal in Armstrong Creek, Lara and the Bellarine Peninsula.
The report shows the median lot price in Geelong hit $275,000 in December, rising $57,000 in a year.
While Geelong land sales fell nearly 70 per cent compared to last year to 355 in the quarter, which research director Michael Staedler attributed mostly to the overhang from the spike in first-home buyers in 2017, he said the amount of stock left on the market after the quarter — about 688 lots — indicated that supply was meeting demand.
Head of communities Luke Kelly said estates, particularly at Armstrong Creek, were finding a good level of activity with competitive pricing.
The findings support Villawood Properties executive director Rory Costelloe view that activity remained good in Geelong while Melbourne declined.
“Melbourne has really dropped off a lot — significantly — with discounting in,” Mr Costelloe said.
“The price gap between Melbourne and Geelong really grew a lot, so now Melbourne is coming back to earth.
“Geelong did rise, and we will suffer some effect from the slowdown, but nowhere near what’s happening in Melbourne.”
Mr Kelly said Geelong’s $50,000 price advantage over Melbourne was helped by the $20,000 first-home buyers grant on top.
But he said developers had also tailored house and land packages to suit first-time buyers typically budgeting to spend up to $430,000.
Mr Kelly said while three-bedroom, two-bathroom houses with a double garage were priced about $430,000, a more affordable medium density market had emerging in Armstrong Creek.
“If you look at first-home buyers, $380,000 to $430,000 is the sweet spot for accommodation and Geelong still presents good value,” he said.
“But what’s happened is down in Geelong there’s an emerging medium density product.”
Projects like Carter Place, from developer APD Projects and Porter Davis, and Middle Park at Glenlee, by ID_Land, offer townhouse products that give buyers affordable options, including two-bedroom, two-bathroom homes between $350,000 and $360,000, or three-bedroom, two-bathroom, double garage for under $400,000.
The outlook is for the land market to remain subdued for another six months before conditions improve and buyers confidence returns.
But the timing won’t stop new players entering the market, like Chinese-backed Jinding Developments which launched its Australian business last week.
The Melbourne-based firm has four Victorian estates in an $800 million pipeline, including Halcyon at Armstrong Creek, a 633-lot development opposite Warralily Village shopping centre.
Development director Liz Ronson told industry players at the launch it was expected Halcyon would be launched around April.