Australians planning to build their homes from scratch in Victoria could spend more on undeveloped land in the coming months

Harmandeep Dhillon, director of Raine & Horne Land Victoria, said the current absence of state government plans to release new housing land could push prices up by as much as 20% over the next year amid high demand from upgraders. and new buyers.

“The problem is developers can’t find enough land, especially in Melbourne’s northern corridor, to meet this demand,” he said.

“The shortfall means that the value of vacant land has increased by 18% to 19%, while this situation is exacerbated by a 25% increase in the cost of some building materials, such as wood.”

Land prices rise as supply remains tight

Land costs are currently $950 to $975 per m², a significant increase from last year when costs hovered around $830 per m² to build.

Raine & Horne Land Victoria recently closed the sale of land that reflects the current strength of the market in terms of prices.

For example, the agency sold a 12-acre estate in Rockbank, a suburb 18 miles west of Melbourne’s CBD, for $22 million.

The agency also recently sold a 7.5-acre parcel in southeastern Melbourne for $8.6 million.

A recent report by the RPM Real Estate Group found that 2,620 gross plots were sold in Melbourne and Geelong, representing a 3% increase in August.

The report also found that land take-up continued to exceed supply.

In fact, Melbourne’s total land supply fell 7% in the month, supporting the 1% increase in the median lot price to $330,000.

Interestingly, the price per m² also increased after the median lot size shrank by 2% to 379 m².

Due to the inspection ban, demand for the new home market has shifted and, according to the report, a healthy profit has arisen on the land market.

Lack of infrastructure delays country releases

Mr Dhillon said the recent shutdowns have not helped to reduce demand for land, unlike last year.

“When COVID hit last year, nobody wanted to buy land and was a bit shocked. But this year people are realizing that once borders and markets open again, prices will skyrocket again, mainly because of supply constraints,” he said.

Even with this high demand for vacant land, the state government cannot release new ones due to the lack of infrastructure projects.

“Councils cannot keep up with the demand for services created by new housing projects,” Dhillon said.

“There are also wider planning issues with the Victorian government committed to protecting Melbourne’s green wedges between new developments.”

This, Mr Dhillon said, is ironic given that many farmers on the outer fringes of Melbourne are eager to sell their properties as they brace for high land taxes.

“Municipality rates are another issue that is forcing many to sell their farmlands, but lack of infrastructure means they are unable to sell,” he said.

Top Suburbs for Land Prices

September 2021 data from the Real Estate of Victoria (REIV) showed that the median land price has reached $490,000 for metro Melbourne and $240,000 for regional Victoria.

REIV has also released key suburbs where land prices have risen significantly over the past year.

Melbourne Metro Land Prices September 2021

Regional Victoria Land Awards September 2021

Data source: REIV

Photo by naobim on Pixabay.

Top Suburbs: Trott Park, Mt Colah, Scarborough, Tuart Hill, Balga

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