Melbourne’s greenfield corridors vital in addressing housing supply pressure
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Melbourne and Geelong’s greenfield growth corridors have emerged as key areas in the quest to address Victoria’s pressing need for new housing as population growth and immigration intensify the squeeze on housing supply. A recent report by RPM Research, Data & Insights has shed light on the current state and future outlook of the residential land market in these regions. The report comes at a time when new land sales have dipped to their lowest in 11 years, with a 12% fall to 1,770 transactions in the last quarter of 2023. This downturn caps a challenging year which saw a 46% decrease in sales, amounting to just 7,839 transactions over 12 months. Despite the challenging sales environment, land prices have shown remarkable resilience, with only a slight decline of 0.5% to $386,900, while the median lot size saw a modest reduction of 1.1% to 350 square metres.
The sluggish sales pace and increased stock levels have continued to impede the introduction of new supply into the market. The year 2023 witnessed a 22% drop in the release of new lots, totalling just 1,452. However, the outlook for 2024 is brighter, buoyed by an improving economic climate and a growing population. Luke Kelly, RPM National Managing Director of Project Marketing, highlighted the renewed optimism among buyers as they enter 2024. “Purchasers are recognising they are now in the box seat to negotiate a good deal, with the sustained period of constrained sales favouring a buyers’ market,” he explained.
Kelly emphasised the critical role of the greenfield land market in addressing Victoria’s housing crisis. With the state’s population expected to grow by 1.7% annually over the next decade and international immigration contributing approximately 127,000 new residents each year, the demand for new, relatively affordable housing near Melbourne’s CBD and major economic and lifestyle centres is significant.
The report also highlighted the evolving demographics of first home buyers, with those aged 35 to 54 becoming the most prominent group, accounting for 43% of sales. Meanwhile, first home buyers continued to dominate the owner-occupier segment of new greenfield land purchases, making up 58% of sales.
Market activity data for Q4 2023 revealed varying performances across Melbourne’s growth corridors. The Western Growth Corridor led in sales, despite a modest 5% decline, while the Northern Growth Corridor lost its status as the most affordable region. The South East Corridor achieved the highest annual growth rate amongst Melbourne’s growth regions, and the Geelong Growth Corridor saw an improvement in affordability despite sluggish sales.
This comprehensive report underscores the complexities of Melbourne and Geelong’s residential land market, highlighting the critical role of greenfield growth corridors in meeting the housing needs of Victoria’s growing population amidst challenging economic conditions.