Greenfields- Year in review.

Written by- Grant Neilson – Greenfields Specialist

What trends did you see in 2021?

Across Melbourne and Geelong, there were a total of 31,280 lots sold in 2021 at an average of 2,600 sales per month. Since 2019, sales volumes have approximately doubled each year.

Strong price growth was recorded across the year with the median lot price increasing by 21% from $302,000 in December 2020 to $365,000 by December 2021.

The South East and Geelong regions recorded the most significant price growth over 2021 with the median lot price increasing by 24% and 23% respectively. In Q4 2020 Geelong was the most affordable region with a median lot price of $280,000, significant pricing growth across 2021 has seen Geelong’s median lot price rise to $345,000 in Q4 2021 above that of both the West region (median of $338,000 in Q4 2021) and the North region (median of $336,000 in Q4 2021).

Upon review of key masterplan communities across the 4 major regions we have seen even larger gains while monitoring key lot types. Warralily saw the largest increase with the price of a 448m2 lot moving by $107,000 (35%) over 2021. For smaller 350m2 lots the largest price increase was in Orana estate in the South East which recorded a price increase of 29% over the year.

At the end of January 2021 there was a total of 4,500 lots available, over the first few months of the year this number fell significantly with 2,900 lots available at the end of April. Over the balance of the year, the number of lots available continued to fall reaching a low of 1,750 at the end of December. The significant reduction in the number of lots available across the year highlighted the significant demand for land in greenfield markets throughout 2021. 

What surprised us in 2021?
The major surprise of 2021 was the overall strength of the greenfield land market, despite:

• Removal of the homebuilder grant in March
• Ongoing restrictions and lockdowns across the entire year

Sales volumes were seemingly unaffected peaking at just over 3,000 in October.

What hurdles did the Greenfield sector overcome in 2021?

Land supply has been a major hurdle in 2021, despite averaging 105 new releases per month, market supply has been unable to keep up with demand. In 2020 the HomeBuilder grant ‘poured more fuel on the fire’ in what was already a hot market, bringing forward demand which has resulted in an extreme lack of supply. As at end of December 2021 there were just 5 weeks of available stock remaining on price lists.

Overcoming this issue is going to be a slow and tricky process. If the market was to cool, this will assist in the short term, however, the emphasis must be on the state and federal governments responsibility to ensure adequate land supply across the board, keeping price growth in check and the dream of owning your home a possibility for the highest possible number of Victorians.

What do you predict are some things to look out for in 2022?

It is anticipated that residential price growth will be more subdued in 2022 as more dwellings are put up for sale mitigating some supply constraints that were present through 2020 and 2021. Demand for residential property may also be dampened with APRA’s tightened borrowing criteria reducing the amount a purchaser can borrow in conjunction with the potential for interest rate rises to ward off rising inflation.  

With the reopening of international borders to international students and skilled workers, the investor market will likely grow. There are signs that investor lending is growing with new loan commitments increasing by 1.1% in October and is now accounting for 33% of all new loan commitments. Increased migration may drive up rents in areas where there is a limited supply of rental properties.  

Due to the pandemic population growth has been stagnant during the last 2 years, with a population increase of 0.2% (34,300 people) in the year ending June 2021. The focus in the new year will be to attract overseas migration which will benefit all areas of the residential property market.

Interesting moments in 2021?

Warralily was the top-performing estate in Victoria in 2021 recording 939 sales across the year. Sales volumes in Warralily remained consistent across the year with over 50 sales recorded each month since February.

In 2020 the average monthly sales per estate were 7.4 in Armstrong Creek. Flash to 2021 the average is 20.8, over an increase of 188%

As we approach our 3rd year in a pandemic, the shift in thinking toward lifestyle over closeness to CBD may well be a permanent change with an increase of 57% of Melbournians making the move to Surf Coast region in the September Quarter. This has enabled price growth in many towns across the region. For example, in January 2021 the median land price in Torquay was $455,000, in November it had increased by 62% to $735,000.