The median price of Melbourne has fallen for the seventh straight quarter and is now well below $200,000 once rebates and incentives are factored in, according to the September quarter Melbourne Growth Area Land Report by Oliver Hume.
It is also the second consecutive quarter that the median land price has fallen below $200,000, with Oliver Hume estimating that $30,000 has been sliced off the median price since the market peaked in December 2010.
Measured across 139 projects, Oliver Hume says the gross median land price over the September quarter was $208,750, or $195,750 after deducting incentives and rebates.
The difference in the two median values exactly matches the $13,000 grant that was withdrawn by the state government on June 30, which was for first-home buyers buying or building new homes up to a value of $600,000.
The report says it may be time to question “what would be the physiological effect on the retail market if rebates and incentives were removed”, adding that “many key stakeholders believe that such an action would reinstall much needed buyer confidence”.
Last month, Rob Pradolin, Australand general manager for residential in Victoria, told Property Observer, developers needed to acknowledge that the “market price of [Melbourne] land has changed” and a “re-adjustment in Melbourne land prices” had taken place.
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The report notes that when rebates and incentives are factored in the fall in first-home buyer median land budgets post the September 2010 peak has been far more dramatic, falling $48,000, or around 25% to $186,000 – a land price level last experienced in the September quarter 2009.
“Current first-home-buyer land expenditure is thus largely in line with the short-term median – which could be interpreted as a stabilising market," says Oliver Hume.
“Or more importantly, as a key leading indicator that land prices are around where they should be in a balanced market."
The report also found that the rate of supply has adjusted to meet the softer market conditions with just 180 lots added to the current pipeline over the quarter, pushing up total retail supply to around 3,700 lots or just under seven months of supply at current sales rates.
The municipality of Hume continued to record the strongest project sales rate, around eight sales per project per month, followed by Casey, with six sales per project per month in the year to date.
Only two new communities were launched over the quarter in Casey and Hume, which will comprise 589 lots when fully developed and a median land price across the two new projects of $214,950.
This brings the year-to-date count to 19 projects, or around 5,421 lots.
In terms of the 139 projects, Wyndham contains 24% of all projects, followed by Whittlesea and Casey, with 22% and 17% respectively.
The most affordable suburbs are in the Shire of Melton ($164,000), most notable in and around Melton township. Werribee South ($609,000), Bundoora ($466,250) and Narre Warren North ($395,000) are the three most expensive suburban land markets