HomeBuilder grant and low cash rates boost demand for land lot sales
Land sales in outer Melbourne and Geelong surged towards the end of lockdown, driven by the HomeBuilder grant and record low interest rates.
RPM Real Estate Group’s Quarterly Report shows sales volume for July to September reached 4566 transactions, a peak not seen since June 2018.
Most of the growth occurred in September as COVID cases started to fall and an end to lockdown was in sight. Monthly gross sales were down 17 per cent in July and a further 21 per cent in August before rebounding in September by 14 per cent.
Median lot prices declined slightly by 2.4 per cent to $305,900 with lot sizes also shrinking marginally by 1.6 per cent to 394 square metres.
RPM chief Kevin Brown was cautiously optimistic about the recovery of confidence.
“What has been the toughest quarter in terms of restrictions, which resulted in the effective closure of real estate for weeks on end, has actually driven a record quarter, demonstrating the resilience of the property market in Victoria,” Mr Brown said.
A quarter of sales were not eligible for the HomeBuilder grant, which suggested purchasers taking advantage of low interest rates, he said.
HomeBuilder gives buyers a $25,000 grant if they start building their house within six months of their land purchase. Applications end on December 31.
Almost 90 per cent of buyers in the quarter were owner-occupiers with 77 per cent first home buyers.
“As confidence returned and restrictions looked to ease, pent up demand drove strong results,” he said.
Developers responded to the unexpected surge in demand by doubling the amount of stock on the market to 4511 lots in the September quarter.
However, he warned there was still uncertainty in the market with the looming end of HomeBuilder grant applications, mortgage deferrals and JobKeeper, combined with the lack of new migrants and students due to border closures.
“If this past six months has had a lot of uncertainty, the next six months will bring even more uncertainty as we don’t know how the market will respond without safety measures such as HomeBuilder and mortgage deferrals in place,” he said.
ANZ associate director of property Daniel Gradwell said the rebound in other capital city markets boded well for Melbourne’s recovery, though government support would still be necessary.
“Nationally, employment recovery has stalled so it’s going to be a long and slow road ahead. Government support remains critical to influence spending patterns and see Melbourne move into recovery mode following its lockdown,” Mr Gradwell said.
Frasers Property Australia reported strong sales figures for the quarter with estates in the west and in regional Wallan showing an 87.5 per cent increase compared with the first lockdown which ended in May.
Frasers’ Victorian general manager of development Sarah Bloom said the HomeBuilder grant “definitely had an impact with a number of people being encouraged to act now rather than wait”.
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