Block sizes fall in budget bonanza
Average Armstrong Creek plot shrinks 48sq m in a year
ARMSTRONG Creek developers are creating smaller blocks and new medium-density projects to target young homebuyers on budgets below $420,000 to counter negative sentiment amid rising land prices.
New research from RPM Real Estate Group shows the median price for a new house block in the Geelong region rose 31 per cent in the September quarter to $272,000, compared to the same time last year.
The research reveals Geelong new land sales made up 17 per cent of Melbourne’s growth areas market, with more blocks selling here than in the southeastern suburbs.
While the region’s average block size was steady at 448sq m, the research shows blocks in Armstrong Creek were shaved by about 48sq m to 400sq m in the quarter in a pitch to buyers on a budget.
RPM Real Estate director of communities Luke Kelly said doubling the first-home buyer grant had pulled forward many purchases in late 2017 and early 2018.
But the surge in sales saw prices rise as the amount of stock fell.
Mr Kelly said a controlled stock release program, especially in Armstrong Creek, also contributed to the fall in sales this quarter.
He expected prices to remain stable as developers fought for the first-home buyer market, now accounting for 60 per cent of purchasers.
“The market has only got a certain amount of money that they can afford and we’ve got to that benchmark in Geelong,” Mr Kelly said.
“Added to the price growth is who they’re selling to and 60 per cent are first-home buyers. Developers know that they can’t keep pushing up prices.”
He said there was an increase in the number of smaller lots put into the market as developers pitched to young buyers, while new estates like Glenlee and Anchorage were trying to create a foothold.
“To appeal to buyers in that bracket from $380,000 to $420,000 as the first-home buyers sweet spot, we want to make sure we’ve got the product to put into the market,” he said.
Several developers are also developing medium-density products, including attached double-storey townhouses, that are priced in that bracket.
More than 600 lots sold in the quarter as Geelong sales lifted from 12 per cent of Melbourne’s growth areas sales in early 2017.
Geelong is considered part of Melbourne’s growth areas market, but Mr Kelly said the region enjoyed lifestyle and price advantages, plus double the first-home buyers grant.
“You make a saving of $50,000 straight off the bat when you move to Geelong (from Melbourne),” he said.
Only estates in Bacchus Marsh, Wallan and Melton South have cheaper land than Geelong.
Increased competition with the new Austin estate opening in Lara underpinned a 17 per cent rise in supply and an 18 per cent jump in sales in the northern Geelong suburb.
The lot price in Lara lifted 1.5 per cent to $264,000. Armstrong Creek was the biggest area with 259 sales for the quarter.
Though the rate of sales fell 19 per cent, buyer demand for available stock caused a 5 per cent price rise to $271,500 for a median lot.