Land lot prices in Melbourne have dropped 15% since 2010, with more room to fall

Land lot prices in Melbourne have dropped 15% since 2010, with more room to fall
Jennifer DukeDecember 7, 2020

Victoria's Planning Minister, Matthew Guy, has recently announced another 50,000 lots of land to be the target for Melbourne this year, with plans to boost the construction industry in the state.

Recently inviting public comment on Precinct Structure Plans for 21,000 housing lots in the southeast, Guy noted that further land would be released this year in the western and eastern corridors.

He noted that every million dollars spent on housing construction creates seven full-time jobs in the building sector, and other flow-on jobs and benefits.

"It is vital for the Victorian economy that our supply of land for housing  growth is strong,” Guy said.

He pointed to lot prices coming down 15%, from $225,000 to $191,000 from 2010 to December 2013, which he said is driven by the strong land release policy under the government. This has seen development projects that are "competing" rise from 90 to 143 over this period.

"This announcement compliments other major projects that have been  approved recently. I am pleased to be able to provide an economic boost  for Victoria and to provide increased housing affordability through  greater competition. More land supply will mean greater competition in the  marketplace, driving lower lot prices for homebuyers,"  Guy said.

"Housing approvals and building activity in Victoria are at the highest  level in three years due to strong policy action by the state government,  and important strategic planning done by the Victoria & Albert," he continued.

The land target applies to the western, northern and south-eastern growth corridors, with all to be within Melbourne's urban growth boundary. No changes to this boundary are being proposed.

He said that over 500 hectares of employment land will be included in the structure plans, and that Development Contribution Plans will apply to every structure plan, to provide open space, community facilities and infrastructure.

Just yesterday, Property Observer reported that developer Satterley Property Group has found the increasing competition difficult to contest with.

"There is a lot of competition at Doreen and there is a difficult balancing act in managing supply and demand with a lot more land been approved for development over the past few years," Jack Hoffmann, Victorian general manager for Satterley said, despite having a bullish view on expected performance this year.

"Victoria has some of the best new suburbs in Australia, with  carefully-planned communities providing liveable homes for our growing  population. We are far better placed for housing growth than other states,  which keeps housing costs comparatively lower, and makes us an attractive  location for investment and business growth," he said.

Another area that is on his radar for land supply in 2014 is Geelong. In addition to Melbourne's 50,000 lots, towns such as Lara have seen a significant number of lots rezoned. There have been 4,000 rezoned in Lara, and he suggested further releases in the Armstrong Creek corridor to progress the growth of Lovely Banks and Batesford South.

Late last year, Property Observer surveyed a number of experts, as well as polled readers, about their thoughts on a potential oversupply in the Melbourne market. While many pointed to an oversupply of apartments in the inner city, there were some that expressed concerns about the number of potential land releases and unsold estates. Of the readers who took part in the poll, which specifically looked at apartments, 44.8% said that Melbourne is oversupplied, but only in the inner city. Meanwhile, 37.3% said that 'Yes' there was an apartment oversupply generally.

jduke@propertyobserver.com.au

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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