INDUSTRY NEWSNEWSVic

Melbourne land prices climb past $350,000 for first time

An average block of land in Melbourne will now set you back $355,000, with prices soaring to a record high at the end of 2021.

According to the Oliver Hume Quarterly Market Insights, median lot prices in all Melbourne growth areas hit the record level in December, after climbing 6 per cent quarter-on-quarter.

The rise equates to an extra $20,000, while for the calendar year the price of a block jumped 11.3 per cent or $36,000.

Land was most expensive in Cardinia, where a 17.8 per cent increase for the December quarter added $64,900 to the cost of a block of land.

In Cardinia the median price of a block of land is now $429,900, which is an annual jump of 23.2 per cent.

Casey recorded the second highest median price for land at $418,000 in the December quarter, an increase of 20.5 per cent compared to the same time last year.

Melton rounded out the top three municipalities for price with a median of $347,500.

Geelong was the strongest market for land last year, with the median price climbing 23.6 per cent to $339,300.

In a market first, every major growth corridor Oliver Hume tracks across the broader Melbourne and Geelong residential markets recorded a median land price of more than $300,000.

Oliver Hume Chief Executive Officer Julian Coppini said the strong numbers underpin how much demand there’s been, however, 2022 will likely see changing dynamics.

“The market is changing and 2022 is going to be a very interesting year,” Mr Coppini said.

“Although 2022 is likely to be one of consolidation, as the market faces both headwinds and tailwinds, we remain positive overall about the outlook as the economy improves and borders reopen.

“While strong price momentum continued up until the end of 2021, sales have eased from record high levels due to a range of factors including affordability pressures and stock levels.”

Mr Coppini expects to see further demand in regional areas in the next 12 months.

“Victoria’s land market is underpinned by record low interest rates and positive sentiment towards the property sector in general,” he said.

“We are seeing strong demand for both regional and metropolitan markets. Although regional markets were increasingly popular before COVID-19, buyer interest has surged over the last two years. We expect regional property will remain highly sought after.”

Oliver Hume Head of National Research George Bougias said a range of factors, including any changes to monetary policy, would influence the market going forward.

“These factors include higher inflation and rising interest rates, potential changes to lending policy by the Australian Prudential Regulation Authority (APRA), the upcoming Federal Election and the gradual reopening of international borders,” he said.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.