Victorian Greenfield Market Update – May 2024

Sales activity across Melbourne, Geelong, Ballarat, Bendigo, and Macedon growth areas has contracted over May, declining by 20% from last month, to 750 lots. This decrease was likely attributed to some sales activity being pulled forward into April to avoid the increase in home construction costs from the National Construction Code (NCC) reforms that came into effect in May. The subsequent impact to sentiment has been augmented by prospective new home purchasers who are already highly price sensitive due to reduced borrowing capacity and constrained affordability. Consequently, following three months of annual growth, gross lot sales were also down 11% on the corresponding figure in the same month last year.

Ballarat’s proportion of total sales doubled to just over 3% in May, after lot sales increased by 53%. All other growth corridors experienced a decline in sales activity, with the relatively expensive South East corridor recording the largest monthly decrease of 29%, followed by a 26% contraction in Geelong. The Western growth corridor maintains its dominant share of total sales, accounting for 36% of activity.

Melbourne’s median lot price hit a new record of $394,000 in May, lifting by 1.5% over the month. Much of this price growth was underpinned by the 1.3% increase in the median lot size to 355sqm, resulting in only a marginal uplift in the median per sqm rate. Lot prices corrected in Geelong, with the median value declining by 1.8% to $380,000, although this was after a larger 6.3% reduction in its median lot size to 375sqm. Rebates and incentives remain prevalent across the new home market, providing purchasers with discounts ranging between 5% and 10% of the headline price.