HEAT BUILDS ON LAND

GEELONG estate developers are releasing stages with fewer than half the blocks usually available as construction delays push the time buyers wait for titles past 18 months, new research shows.

RPM Real Estate Group research manager Michael Staedler said the developers were drawing out land releases as the number of active estates fell from 36 last year to 22 in the June quarter.

“Since June 2017 the release programs were stretched out, so instead of doing 30 or 40 lots at a time, they were doing 10 to 15,” Mr Staedler said.

He said the developers were reacting to construction delays blowing out past 18 months, which created uncertainty around the potential value of land once titles were available.

Developers adopted the cautious approach after copping a buyer cancellation rate between 40 and 50 per cent in 2012 when a glut of new land dropped in value after being caught up in a nationwide construction boom.

Coupled with regular price increases, Mr Staedler said the Geelong region’s median block price rose more than $54,000 in 12 months to $257,500.

The region made up 15 per cent of the greater Melbourne market as sales fell sharply, particularly in the western suburbs.

The tight land supply was also felt in the amount of ready-for-sale land being held in reserve by developers.

RPM’s June quarter Residential Market Review showed the ready-for-sale supply would last 28 days in Geelong, down from 73 days last year.

In healthy market condi- tions, Mr Staedler said developers should hold between 90 and 120 days supply in reserve, which also provided a natural brake on price increases.

Armstrong Creek remains the biggest driver in the region, with 321 lot sales in the quarter.

Mr Staedler said the growth area offered the best choice of size, price and amenity for buyers, with six active estates.

Sales more than doubled in urban Geelong, which includes Highton, Wandana Heights, Fyansford and Marshall, despite two fewer active estates, while sales were also up in Lara where one estate was operating.

The Bellarine Peninsula holds the region’s cheapest land market but sales fell 106 to 276 lots as three estates closed.

Villawood Properties executive director Rory Costelloe said developers risked turning away buyers if they continued to push prices too high.

Mr Costelloe said high demand, coupled with the Melbourne Metro rail tunnel project, was creating the construction delays, up to 15 months at Villawood’s Armstrong estate.

“There is so much demand we can’t build it any quicker but we can’t release any more because we think it’s irresponsible,” he said.

“People can’t organise finance that far away — they don’t know what their house is going to cost.

“People want to be in their house in two years, not buying their block in two years.

“Normally our blocks are nine months out and nine months to build your house, so 18 months and you’re in your house.

“The timelines at the moment are way over.”