Victoria’s Dirt Merchants Need Incentives to Shift Lots

Greenfield developers in Victoria are increasingly leaning on incentives and rebates to shift their product as the market moderates. 

More than 75 per cent of buyers in Victoria’s greenfield market are owner-occupiers and sales volumes moderated in April, according to Oliver Hume data. 

Affordability and serviceability constraints were hampering potential buyers. 

Oliver Hume chief executive of project marketing Julian Coppini said the land market continued to face challenging conditions. 

“Although the fundamentals for the next phase of the market cycle are progressively falling into place,” Coppini said.  

Higher interest rates, increased cost of living and lower buyer confidence hindered many potential buyers from purchasing property.

Coppini said developers were relying on incentives and rebates, which had cut net lot prices in the past year. 

The Urban Developer understands incentives in the Victorian greenfield market are 5-10 per cent of the headline price, which is continuing to provide momentum in the growth corridors. 

Sales by buyer type

Source: Oliver Hume

“Although Victorian gross prices remain around record highs, net prices have fallen over the last year as incentives and rebates have become increasingly common. In recent months, many buyers have taken the opportunity provided by generous discounts,” Coppini said.
 
“Buyer activity has also edged higher recently, driven partly by a growing housing crisis and an increasingly tight rental market.

“The rebound in the broader residential property market has seen existing home-owners increasingly look to the new residential land market. Although price growth in the Victorian property market has lagged that of many other jurisdictions, many home-owners have sought to capitalise on growth in their home equity while developers are offering discounts.”

The number of first home buyers who made acquisitions in April of 2024 was 50 per cent in the Victorian greenfield market, the strongest it has been since August last year, while almost 80 per cent of buyers were aged from 26 to 40 years. 

Victoria’s median lot size is about 350sq m with a median lot price of about $386,900. 

According to Oliver Hume, the share of lots in the 350sq m to 399sq m category rose in April 2024 due to an increase in stock offered to the market and developer incentives. The more affordable 250sq m to 299sq m category also edged higher to more than one in every seven lots sold.