- A record median land price of $283,000, a MoM increase of $7,000
- The median land price has swelled by just over $42,000 since January this year, an increase of close to $10 per hour
- The Shire of Mitchell with a median land price of $160,000 is Melbourne’s most affordable municipality
- The City of Casey continues rapid growth reaching $360,000, YoY growth of around $110,000.
I don’t believe anyone saw what was on the horizon, or at least the velocity of transition. The landscape has changed substantially at a number of levels.
The key drivers of demand: population, household structure, affordability, and consumer confidence are favourable and have been well documented.
The supply-side, albeit less favourable, has too. That said, the supply-side will need to get a wriggle on if you believe supply constraints, in part, drive price growth!
But it’s a finer grain that eyebrows become raised.
Project sales volumes are at an all-time high pushing into the 20,000’s.
The Median Price Ladder – June 2017
Wyndham comprises around 30 per cent of all project land sales, followed by Casey and Melton with around 20 per cent. Mitchell and Cardinia are the only municipalities recording single digit percentage market share.
Double digit sales rates are the new norm, if you have stock to sell. Of course, stock levels remain at historical lows below one month, with Cardinia the tightest of all markets.
Touching quickly on population which is one of the key demand drivers, Victorian population growth of around 147,000 suggests underlying demand could be north of 27,000: well above Victoria in Future numbers.
Victoria is the fastest growing State or Territory in both number and percentage terms – 2.4 per cent. Victoria in Future 2016, to 2031, indicates that Melbourne’s growth area population will grow by around 950,000 persons around 360,000 households.
This equates to around 18,000 new households per annum – well below current levels.
Broad hectare parcels are also transacting at record levels, in many instances at prices that are making long established developers review their funding models and business plans.
Perhaps the most significant dynamic, the growth area land market is attracting developers from other property sectors, taking both passive and active positions.
Many are reallocating funds from the tempering Melbourne Central Business District apartment market. Many, are international or internationally backed. Many are entering the land market for the first time.
More importantly, many more will follow as the Melbourne growth area land sector now sits front and centre on the Asian stage.
And in terms of pricing, the story continues …
Melbourne’s growth area land prices have increased by $7,000 during June or at a rate of around $230 a day.
The median land price is now $283,000 (approximately $700 per square metre).
The median land price has swelled by just over $42,000 over the last 180 days. It goes without saying, this is well in excess of wage growth (which sits at a record low of around 2 per cent year on year).
The City of Casey has once again, recorded the highest median land price of all seven growth, with a median of $360,000 on strong volumes (second to Wyndham). At the half way mark, Cardinia has landed in second place with a median of $319,000.
Hume has cemented its third position with a median of just over $300,000 – year-on-year growth of around 26 per cent (or $80,000). It has stolen this position in the year past from the growth area giant Wyndham who continues to grow but at a steadier, more tempered rate of 16 per cent (or $45,000).
In the north, Whittlesea, follows a similar story to the rest of the market. At $275,000, year-on year price growth of 22 per cent ($60,000).
With strong levels of stock, Melton boasts healthy price growth and remains the second most affordable land market in the Melbourne region – sitting eagerly at $230,000 as it breaks away from Mitchell, in the cities outer north ($160,000).
To come full-circle, I don’t believe anyone knows whether we can call the ‘top of the market’ in terms of pricing.
The fundamentals remain sound, and all things being equal, I believe we will edge even closer to the $300,000 over the coming months, in parallel with tempering sales volumes.