Q3
2022
GREENFIELD MARKET REPORT
RPM Group is Victoria’s most successful residential development sales, marketing and advisory agency. We specialise in sales within master-planned communities, medium and high-density developments, greenfield and infill development sites, and international investment sales. We advise our clients on all aspects of the sales process from site due diligence, acquisition, planning and risk mitigation through to product mix, pricing, launch, sales and settlement. Our research-backed strategies deliver higher revenues and sales rates, and better returns for our clients.
2 - RPM Group
Inside 03 From Our CEO
12 Vacant Land Market
Our CEO, Gary Dunne, provides insight into the overall landscape, and explains how
Lot sales are down as purchaser sentiment wanes, but buyers have more opportunity to
people are combatting affordability issues without compromising lifestyle.
take their time to make purchase decisions, with more buyers visiting estates multiple times. The Northern Growth Corridor is attracting the most first home buyers, with relatively quick time on market for new lots.
06 Lead Indicators
30 Regional Markets
The key numbers driving the market; including the sharpest cash rate increases since
Property prices remain high, but enquiries have fallen in regional markets, with supply now
1994, a boost in population and a drop in Melbourne’s median house price.
outstripping demand, but strong rental yields are attracting investors.
08 Development Sites
36 Greenfield Townhomes
Quality sites are still transacting and price per hectare remains strong, even as the market
As affordability concerns grow, diverse product offering is vital for greenfield estates to
cycle quietens. RPM’s recent sale at Point Cook Road demonstrates continuing demand,
provide options for potential buyers who still value internal space, good location and local
transacting at a record land rate for the area.
amenity, but may be looking for an alternative to a detached dwelling on a large block.
Q3 2022 - Greenfield Market Report - 1
2 - RPM Group
Welcome to Our Q3 2022 Greenfield Market Report •
Consecutive rate rises temper consumer sentiment
With the big four banks passing on rate rises with immediate effect, consumers are
•
Despite rises, inflation is expected to hit its highest peak in three decades
starting to tighten their belts as debt and affordability become the issues of the day. This
•
Unemployment remains steady at 3.5%
monetary policy is squarely aimed at tempering inflation in an effort to return it within the RBA’s band of 2% to 3%.
The Victorian property market recorded 21,141 sales on a rolling 12-month basis, and 2,984 sales for the quarter. On a previous corresponding period (PCP) basis, sales continued
While this has been a period of change from a revenue perspective, many builders and
to flatline against the backdrop of a boom market. The greenfield property market
developers are recovering from significant growth. Challenges surrounding raw materials,
experienced slower sales, given economic and political uncertainty.
building costs and labour have continued to escalate prices for both new and existing customers. These are not expected to temper until mid-2023.
The sector is not expecting any economic stimulus associated with the upcoming elections, despite continuous pressure on affordability due to rising inflation.
To assist in addressing the issue of consumer deposits and affordability, we have seen a shift to smaller lots, but not smaller lifestyles. This trend is expected to continue, given the
Inflation remains stubborn and is expected to peak at approximately 7% or higher.
significant shortage of homes in general.
Economists are now suggesting inflation of around 8% may occur in the lead-up to Christmas or Q1 2023. Should this occur, this will be the highest inflation seen in Australia
Should you require further details, please visit www.rpmgrp.com.au. For a detailed market
over the past three decades.
analysis or a special report, email the team at contactus@rpmgrp.com.au
Consumer sentiment is expected to remain cautious and continue into Q4 2022 and the new year. This is driven by strong domestic demand, supply chain issues and market
Gary Dunne
confidence.
Chief Executive Officer gary@rpmgrp.com.au
The market continues to face the challenges of consecutive interest rate rises, with the cash rate now sitting at 2.35%. There is an expectation that rates will continue to rise, albeit at a more moderate level of 0.25% throughout the remainder of 2022.
Q3 2022 - Greenfield Market Report - 3
4 - RPM Group
Comprehensive Market Research and Intelligence RPM’s Research, Data & Insights division provides in-depth analysis on current local and
FOR FURTHER INSIGHTS OR BESPOKE ANALYSIS CONTACT
overseas economic and property market conditions. The team consists of economists, property experts and GIS analysts who provide real-time market intelligence, analysis and strategic advice.
Michael Staedler Group Manager - Research, Data & Insights m.staedler@rpmgrp.com.au
The team’s knowledge and expertise is an invaluable resource for RPM’s developer clients, providing the platform for intelligent, informed, and strategic decision-making in the
Andrew Raponi
evaluation of residential development and investment opportunities.
Research Manager a.raponi@rpmgrp.com.au
Our research is comprehensive, monitoring over 350 projects across the east coast of Australia. And, our reporting can be tailored to provide you the specific intel you need to drive the success of your project.
Jonathan Mayes Research Manager j.mayes@rpmgrp.com.au
Or sign up for each of our quarterly reports by visiting www.rpmgrp.com.au
Q3 2022 - Greenfield Market Report - 5
Lead Indicators Cash Rate (Nov-22)
Quarterly GDP (Jun-22)
Quarterly Inflation (Sep-22)
Sharpest rate increases since 1994.
Continued growth after the boarders reopened in Q1
The annual increase of 7.3% is a 32 year high with large increases in new dwelling purchases and fuel prices.
Unemployment Rate (Sep-22)
Annual Population Change VIC (Mar-22)
2.85%
3.50%
Stablising at near historical low.
6 - RPM Group
0.90%
6,593
All states recorded positive growth over the year.
1.80%
Exchange Rate AUD/USD (Sep-22)
0.64
Eased by 5 cents over the month with increasing global uncertainty but remaining well above pandemic low.
VIC Wage Growth Index (Jun-22)
Melbourne Median House Price (Sep-22)
VIC Average Weekly Earnings (May-22)
Keeping in line with the national average
A fall of 7.4% over the quarter, and 8.1% over the year.
Ranking mid field with other states.
VIC Quarterly Employment Growth
VIC Unemployment (Sep-22)
VIC Employment Participation (Sep-22)
Modest increase over Q2 2022.
Edged lower in September to remain under 4% for the fifth straight month.
Sitting above the national level of 63.8%.
2.50%
0.74%
$993k
3.50%
$1,750
64.4%
Source: ABS, RBA, REIV. All data updated as of 4/8/2022
Q3 2022 - Greenfield Market Report - 7
Q3 2022
Development Sites Englobo transactions in 2022 have highlighted a set of fundamental trends
Another emerging driver in the development sites market is the demand for infill space.
driving the sector as the market takes a step back from the frenetic pace set by
This aligns with the rising popularity of townhomes, both within master-planned growth
HomeBuilder and the pandemic.
area communities and metro areas, and is creating future opportunity as Melbourne’s sparse greenfield space diminishes.
This quarter remained subdued in terms of material transactions and on-market listings, but the background discussions and planning reveal both buyers and sellers
RPM’s sale of 359 Point Cook Road this quarter was a great example of a quality infill site
are taking a long-term, strategic lens when it comes to land investment.
transacting at a record land rate. The strong level of interest demonstrated the appeal of a prime site at any time in the market cycle. You can read more about how RPM supported
The transactions that occurred this period corroborate that strategic view, with
our clients on this sale on page 10.
quality sites remaining in demand, and still selling for top price. One of the core long-term trends emerging in this space is the consistently strong price per hectare,
The other sector likely to remain hotly contested is quality industrial space, which is
demonstrating the resilience of the development sector through broader market ups
unsurprising given the requirement for a further 4.5 square metres of developed industrial
and downs, underpinned by sophisticated buyers with long-range investment plans,
space for each new person arriving in Australia.
and sellers willing to hold out for the right price.
8 - RPM Group
In the short term, we anticipate the greenfield market may remain quiet (albeit strong from a price per hectare perspective), at least in comparison to the quantum of transactions in 2021, but there are several factors on the horizon that are likely to impact the pace of sales in this sector. The first is anticipated population growth for Victoria over the next 12 to 18 months
Another emerging driver in the development sites market is the demand for infill space. This aligns with the rising popularity of townhomes, both within masterplanned growth area communities and metro areas, and
which will drive home demand across numerous sectors. The other influence is the
is creating future opportunity as Melbourne’s sparse
easing of the construction backlog, which is a deterrent for buyers and developers
greenfield space diminishes.
in the present environment. Ultimately, both industrial and residential developers will remain on the look-out for quality stock, so the right land at the right price will always transact.
Contact us about development site opportunities Ed Wright National Director - Head of Transactions & Advisory
Image: 359 Point Cook Road, Point Cook - recently sold by the RPM Transactions &
edwright@rpmgrp.com.au
Advisory team. Q3 2022 - Greenfield Market Report - 9
CASE STUDY
SPOTLIGHT ON
359 Point Cook Road, Point Cook Inviting Infill The last significant zoned development site in Point Cook was bound to attract attention, but the fundamental driver behind the RPM Transactions and Advisory team’s approach to 359 Point Cook Road was creating value for the vendor and commercial confidence for the ultimate buyer. The area, located at the city-end of Melbourne’s western growth corridor, was primarily developed in the early 2000s, and has an international reputation because of its award-winning land projects, bayside location and high-quality community infrastructure. Interestingly, the vendors had sold the surrounding 33 hectares of land to a developer in 2012, with this 2.36 hectare site the last remaining section of their original property, including the family home. As such, finding the right partner to help them extract the land’s maximum value was vital to the owners. Although it’s located in the Wyndham growth region, 359 Point Cook Road is a true infill site well suited to medium density development. RPM’s expertise in this space saw our team working
SITE HIGHLIGHTS
closely with prospective buyers on product mix, marketing and price modelling to give them the confidence to maximise their offers. The approach unearthed 107 enquiries and 10 offers submitted over the four week campaign, ultimately achieving a sale price more than a million dollars over the quoted range. This sale demonstrates the continuing appetite for quality sites in prime locations, and represents a record land rate for the area. 10 - RPM Group
2.36 Ha
107m frontage to Point Cook Road
Zoned General Residential
Prestigious growth area suburb, only 20km from Melbourne CBD
12 minutes from Altona Beach
Surrounded by well-established infrastructure
Q3 2022 - Greenfield Market Report - 11
Q3 2022
Vacant Land Market Enquiries and lot sale activity across Melbourne and Geelong growth areas
Active purchasers who remain in the market are proceeding more cautiously through
plummeted in Q3. This is unsurprising, given the various headwinds buffeting the
their buying decisions and pushing for extended title timeframes to increase savings
new home market. Gross sales dropped 41% to 2,695 lots and reduced 66% year-
before having to start making loan repayments. RPM buyer surveys in Q3 2022 show the
on-year, the lowest quarterly total in over three years. While this is well above the
proportion of buyers visiting an estate more than once before purchasing has increased,
previous cyclical low of 1,865 in Q2 2019, it remains significantly depressed when
and approximately 90% of lots sold had a slated title timeframe of six months or more.
looking across five- and ten-year averages. This pushes out average time spent on market, more than doubling to 54 days this quarter. Soaring residential construction costs are an added burden specific to the
New supply outpacing lot absorption is also contributing to this time increase, although
new home market, demonstrated through the substantial 20.4% annual rise in
to a much lesser extent, given the decrease in new releases aligned with the decrease in
Melbourne’s CPI Index for new dwelling purchase by owner occupiers.
sales.
Purchaser sentiment across all segments of the property market deteriorated further
Rising interest rates and building costs have directed demand towards more affordable,
following the Reserve Bank of Australia (RBA)’s 50 basis point monthly cash rate
smaller lot products. This has led to Melbourne’s median lot size reducing to a record
increase through Q3, with commensurate rises largely applied to both variable and
low of 350 square metres. Subsequently, the median lot price has contracted from last
fixed housing rates by home loan providers.
quarter’s peak, reducing 0.8% to $376,000, but price per square metre growth remains positive.
12 - RPM Group
Contact us to unlock the potential of your project
Rod Anderson Managing Director - Communities rod@rpmgrp.com.au
Image: Rosenthal, Sunbury - Nominated for the Masterplanned Development Award, UDIA Awards for Excellence 2022.
Q3 2022 - Greenfield Market Report - 13
ACTIVE AND NEW ESTATES - MELBOURNE AND GREATER GEELONG
STOCK ADDED TO MARKET - MELBOURNE AND GREATER GEELONG
NUMBER OF ESTATES
NUMBER OF LOTS 7,000
250
6,000
200
5,000
150
4,000
100
3,000 2,000
50
1,000 0
0
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Active estates
New estates
New lot releases
BUYER ACTIVITY - MELBOURNE AND GREATER GEELONG GROSS LOT SALES
LOT PRICE AND SIZES - GREATER MELBOURNE (EXCLUDES GREATER GEELONG)
AVERAGE TRADING DAYS OF LOTS SOLD
10,000
200
8,000
150
MEDIAN LOT PRICE ($)
MEDIAN LOT SIZE (SQM)
$400,000
410
$350,000
400
$300,000
390 380
$250,000
6,000 100 4,000
370
$200,000
360
$150,000 50
2,000
350
$100,000
340
$50,000
0
0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Melbourne
Greater Geelong
Average trading days
Source: RPM Research, Data & Insights
14 - RPM Group
Stock returned to market
330
$0
320 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Median lot size
Median lot price
% OF MELBOURNE GROSS LOT SALES
% CONTRIBUTION TO TOTAL GROSS LOT SALES Q3 2022
74% $325K>
50% 37% 8%
$301K $325K
14% 16% 7%
$275K $300K
13% 16% 4%
$251K $275K
10% 11% 7%
<$250K
13% 21%
0% Q3 2022
10% Q3 2021
20% Q3 2020
30%
40%
50%
60%
70%
Casey
15%
Cardinia
5%
Hume
5%
Whittlesea
13%
Sunbury & Macedon
6%
Mitchell
4%
Wyndham
22%
Melton
19%
Moorabool
1%
Greater Geelong
9%
Source: RPM Research, Data & Insights
Q3 2022 - Greenfield Market Report - 15
Buyer Surveys RPM surveys every buyer on our clients’ estates in the greenfield market. The following illustrates demographic and purchase intent amongst all purchasers over Q3 2022.
OWNER OCCUPIER VS. INVESTOR
84%
OWNER OCCUPIER TYPE
HOUSEHOLD TYPE
Other
3%
Group Household
0%
4th Home
2%
Single
14%
3rd Home
9%
Couple
18%
2nd Home
38%
Family
68%
1st Home
49%
Owner occupier
16% Investor
16 - RPM Group
COUNTRY OF ORIGIN (TOP 5)
PURCHASE TYPE
House & land
20%
Australia
41%
Land only
55%
India
25%
Townhome
25%
Philippines
9%
Pakistan
6%
China
5%
HOME & LAND BUDGET
LOT SIZE
INTENDED SIZE OF HOME (INCLUDING GARAGE)
>701sqm
2%
>$950k
9%
>30 sqs
22%
676-700sqm
1%
$900-950k
5%
26-30 sqs
26%
651-675sqm
0%
$850-900k
6%
21-25 sqs
29%
626-650sqm
1%
$800-850k
10%
16-20 sqs
21%
601-625sqm
1%
$750-800k
8%
<15 sqs
3%
576-600sqm
1%
$700-750k
10%
551-575sqm
0%
$650-700k
12%
527-550sqm
2%
$600-650k
4%
501-525sqm
6%
$550-600k
10%
476-500sqm
6%
$500-550k
16%
451-475sqm
2%
$450-500k
6%
426-450sqm
8%
$400-450k
2%
401-425sqm
4%
<$400k
3%
376-400sqm
17%
Undecided
5%
351-375sqm
2%
Double Storey
62%
326-350sqm
6%
Single Storey
32%
301-325sqm
3%
276-300sqm
6%
251-275sqm
10%
<250sqm
27%
NUMBER OF STOREYS CONSIDERED
Q3 2022 - Greenfield Market Report - 17
VACANT L AND
Western Corridor The largest decline in growth area sales activity in Q3 occurred in the Western
BUYER SURVEY OVERVIEW
Growth Corridor, which contracted 45% from last quarter. Sales activity in Wyndham continues to outperform Melton, with 16% more lots sold, despite
Owner occupiers represented 73% of purchasers in the Western Growth Corridor, the
containing 13 fewer active estates.
lowest share among the growth corridors. However, its proportion of first home buyers at 57% was relatively high. Couples with children were the most prominent household
New lot supply also dropped 45% this quarter, driven primarily by weakening
structure at 55%, while 46% of buyers were aged between 35 and 49.
demand. There are now just 83 active estates, the lowest number in three years for Western Growth Corridor.
In the Western Growth Corridor, 60% of purchasers were considering building a double storey home, driving up the number planning to build homes larger than 30 squares and
Pricing movement varied between locations, with median lot value increasing
spending above $450,000 on construction were 24% and 13% respectively, the highest
1.0% in Wyndham and declining 2.5% in Melton. This was likely attributed to lot
proportions across all growth corridors.
absorption outpacing new lot supply in Wyndham, with the opposite occurring in Melton. Very little separates the median price in the two growth areas, with demand also concentrated on similar lot types, resulting in a 350 square metre median lot size across both municipalities.
The Western Growth Corridor includes growth areas of Melton, Wyndham and Bacchus Marsh. 18 - RPM Group
ACTIVE AND NEW ESTATES - WESTERN CORRIDOR NUMBER OF ESTATES 100 95 90 85
1,123 Gross Lot Sales
73%
80
Owner Occupiers
70
75
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Active Estates
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
New Estates
STOCK ADDED TO MARKET - WESTERN CORRIDOR NUMBER OF LOTS 3,500 3,000 2,500 2,000
1,200
57%
New Lot
First Home Buyer
1,500 1,000 500 0
Releases
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 New Stock Releases
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Stock Returned to Market
BUYER ACTIVITY - WESTERN CORRIDOR GROSS LOT SALES
AVERAGE TRADING DAYS OF LOTS SOLD
4,000
200
3,500 3,000
150
2,500 2,000
350 sqm
40%
Median Lot Size
of Buyers Aged 25-34
100
1,500 1,000
50
500 0
0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Wyndham
Melton
Moorabool
Average Trading Days
MEDIAN LOT PRICE & SIZE - WESTERN CORRIDOR MEDIAN LOT PRICE
MEDIAN LOT SIZE (SQM)
$500,000
410 400
$400,000
390 380
$300,000
$380,000
16%
Median Lot Price
Household Income $80-100k
370 360
$200,000
350 340
$100,000
330
$0
320 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Median Lot Size
Median Lot Price
Q3 2022 - Greenfield Market Report - 19
VACANT L AND
Northern Corridor
While new supply dropped 46% in Q3, active estates in the Northern Growth
BUYER SURVEY OVERVIEW
Corridor rose to 63. Owner occupiers represented 77% of buyers in the Northern Growth Corridor, with 58% Gross lot sales dropped below 1,000 lots for the first time in over three years, with
first home buyers. This was the highest share of first home buyers across all growth areas,
Whittlesea and Sunbury representing an increasing share of lot sales but Mitchell
but only 32% of purchasers were aged between 25 and 34, the lowest figure recorded.
continuing to lack momentum, demonstrated by its 58% drop in sales.
Most buyers in Northern Growth Corridor were aged 35 to 49 (46%) and in a couple with
Average time on market was a relatively quick 50 days compared to the other three
children household (49%).
growth corridors. This has been supported by more affordable lot pricing, and median lot size of 350sqm remaining steady to support only marginal growth in the median lot price.
The Northern Growth Corridor includes growth areas of Hume, Whittlesea, Sunbury & Macedon, and Mitchell. 20 - RPM Group
ACTIVE AND NEW ESTATES - NORTHERN CORRIDOR NUMBER OF ESTATES 70 60 50 40
792
77%
Gross Lot Sales
Owner Occupiers
30 20 10 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Active Estates
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
New Estates
STOCK ADDED TO MARKET - NORTHERN CORRIDOR NUMBER OF LOTS 2,500 2,000 1,500
801
58%
New Lot
First Home Buyer
1,000 500 0
Releases
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 New Stock Releases
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Stock Returned to Market
BUYER ACTIVITY - NORTHERN CORRIDOR GROSS LOT SALES
AVERAGE TRADING DAYS OF LOTS SOLD
2,500
200
2,000
150
1,500 100 1,000
350 sqm
32%
Median Lot Size
of Buyers Aged 25-34
50
500 0
0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Hume
Whittlesea
Sunbury & Macedon
Mitchell
Average Trading Days
MEDIAN LOT PRICE & SIZE - NORTHERN CORRIDOR MEDIAN LOT SIZE (SQM)
MEDIAN LOT PRICE $400,000
410
$350,000
400
$300,000
390 380
$250,000
370
$200,000
$354,000
18%
Median Lot Price
Household Income $80-100k
360
$150,000
350
$100,000
340
$50,000
330
$0
320 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Median Lot Size
Median Lot Price
Q3 2022 - Greenfield Market Report - 21
VACANT L AND
South East Corridor Sales activity reduced by 32% in the South East Growth Corridor, a comparatively
BUYER SURVEY OVERVIEW
softer sales drop driving up its proportion of total gross sales across all growth areas.
The proportion of owner occupiers was highest in the South East Growth Corridor at 79%, although just 46% of these purchasers were first home buyers. Those looking to build
Active estate numbers dipped below 40 for the first time since early 2019, resulting
their second family home accounted for 35% of purchasers, further highlighting the more
in a 39% fall in new releases.
expensive pricing in the area as a barrier to entry for first home buyers.
Interestingly, just over one quarter of lots sold were either titled or slated to be titled
Couples with children accounted for just under a half of buyers, and the most popular
within six months, and among relatively expensive lot pricing there is emerging
home size was between 21 to 25 squares, with 36% planning to spend between
demand for older stock which is more likely to be discounted.
$300,000 and $350,000 on construction.
Deteriorating affordability is having a greater impact in the more expensive South East, with median value contracting 6.3% and lot sizes reducing 7.9% in Q3.
The South East Growth Corridor includes growth areas of Casey and Cardinia. 22 - RPM Group
ACTIVE AND NEW ESTATES - SOUTH EAST CORRIDOR NUMBER OF ESTATES 60 50 40 30
544
79%
Gross Lot Sales
Owner Occupiers
20 10 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Active Estates
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
New Estates
STOCK ADDED TO MARKET - SOUTH EAST CORRIDOR NUMBER OF LOTS 2,000 1,500
567
46%
New Lot
First Home Buyer
Releases
1,000 500 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 New Stock Releases
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Stock Returned to Market
BUYER ACTIVITY- SOUTH EAST CORRIDOR GROSS LOT SALES
361 sqm
39%
Median Lot Size
of Buyers Aged 25-34
AVERAGE TRADING DAYS OF LOTS SOLD
2,000
200
1,500
150
1,000
100
500
50
0
0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Casey
Cardinia
Average Trading Days
MEDIAN LOT PRICE & SIZE - SOUTH EAST CORRIDOR MEDIAN LOT SIZE (SQM)
MEDIAN LOT PRICE $500,000
410 400
$400,000
$415,000
14%
Median Lot Price
Household Income $60-80k
390
$300,000
380
$200,000
370 360
$100,000
350 340
$0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Median Lot Size
Median Lot Price
Q3 2022 - Greenfield Market Report - 23
VACANT L AND
Geelong Corridor Geelong Growth Corridor added four new estates in Q3, a positive sign after the low
BUYER SURVEY OVERVIEW
estate numbers in early 2022. The majority of these new estates were situated in the Armstrong Creek region. These new estates meant new lot supply only declined
Geelong’s purchaser demographic tended towards younger buyers, with 40% aged
5%, although gross sales decreased another 39%.
25 to 34, and only 37% aged 35 to 54. This led to a higher proportion of single person households (26%), although couples with children still accounted for 38% of households.
Median lot prices contracted by a marginal 0.3% to $379,000. This remains slightly more expensive than Melbourne’s median land price, highlighting ongoing regional
Approximately 29% of purchasers budgeted $250,000 to $300,000 for construction,
affordability concerns which are impacting new home demand. To combat this,
with 39% planning a 21 to 25 square home.
purchasers are seeking more affordable lot options, which has led to Geelong’s median lot size diminishing 1.7% to a new low of 386 square metres.
The Geelong Growth Corridor includes growth areas of Armstrong Creek, Bellarine and Lara. 24 - RPM Group
ACTIVE AND NEW ESTATES - GEELONG CORRIDOR NUMBER OF ESTATES 50 40 30
236
76%
Gross Lot Sales
Owner Occupiers
20 10 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Active Estates
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
New Estates
STOCK ADDED TO MARKET - GEELONG CORRIDOR NUMBER OF LOTS 1,000 800 600
408
55%
New Lot
First Home Buyer
Releases
400 200 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 New Stock Releases
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Stock Returned to Market
BUYER ACTIVITY - GEELONG CORRIDOR GROSS LOT SALES
AVERAGE TRADING DAYS OF LOTS SOLD
1,200
250
1,000
200
800
150
600
386 sqm
40%
Median Lot Size
of Buyers Aged 25-34
100
400
50
200 0
0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Armstrong Creek
Bellarine
Geelong
Lara
Torquay
Average Trading Days
MEDIAN LOT PRICE & SIZE - GEELONG CORRIDOR MEDIAN LOT SIZE (SQM)
MEDIAN LOT PRICE $390,000
460
$370,000
440
$350,000
420
$330,000
$379,000 Median Lot Price
15% Household Income $160-180k
400
$310,000
380
$290,000
360
$270,000 $250,000
340 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Median Lot Size
Median Lot Price
Q3 2022 - Greenfield Market Report - 25
26 - RPM Group
Contact us to unlock the potential of your project We are incredibly proud that Rosenthal has been shortlisted for the UDIA Victoria Awards for Excellence 2022 for Masterplanned Development. Winners will be announced on Friday 2nd December at the year end celebration. You can register to attend this event through the UDIA events page at:
Rod Anderson Managing Director - Communities rod@rpmgrp.com.au
https://udiavic.com.au/events/ Q3 2022 - Greenfield Market Report - 27
Q3 2022
What Does a 400sqm Lot Cost? Find your next lot through our RPM projects. https://www.rpmgrp.com.au/project/
28 - RPM Group
Wallan $345,000 Beveridge $372,000 Kalkallo $385,000
Sunbury $370,000
Bonnie Brook $423,000
Bacchus Marsh $290,000
Aintree $416,000
Deanside $427,000
Weir Views $357,000
Tarneit $426,000 Manor Lakes $376,000 Mambourin $393,000
Mickleham $433,250
Donnybrook $373,500
Wollert $452,000
Fraser Rise $429,000
Mt Atkinson $446,500 Truganina $400,000
Werribee $379,500
Officer $485,000
Lara $379,000
Pakenham $369,000
Officer South $460,000
Clyde North Cranbourne $460,000 $516,000 Clyde Botanic $456,000 Ridge $470,000
Armstrong Creek $415,000
Bellarine $350,000
Q3 2022 - Greenfield Market Report - 29
Q3 2022
Regional Market After being eclipsed by demand during the pandemic, supply is now outstripping demand in regional areas, with buyers losing confidence in their ability to buy and build amid rising construction costs and falling borrowing capacity. There is a clear decrease in enquiries, with households taking stock of their current and likely future financial positions. As a result, increasing stock is starting to rise in regional markets. While property prices remain 15.5% higher than last year, rising interest rates are starting to impact the market, with the median house price falling 2.8% from Q2 to $603,000. The challenging landscape is somewhat countered by sustained strong interest in regional areas by both owner-occupiers and investors, with rental yields at 3.5% compared to Melbourne’s 2.4% yield.
30 - RPM Group
Regional supply is finally rising, but buyers are now holding back.
Q3 2022 - Greenfield Market Report - 31
REGIONAL
Ballarat Corridor Ballarat’s 25.5% drop in sales in Q3 is overshadowed by a 48.7% sales reduction
OUTLOOK
year-on-year; the lowest quarterly total since Q2 2017. New lot releases also dropped by more than half annually, to numbers not seen since Q3 2017.
The incorporation of smaller and more affordable lots to offset the challenging purchasing landscape is potentially problematic from a regional perspective, given the typical focus
While the lack of supply in 2020 was impacted by council operation lockdown
on above-average lot sizes in these areas. However, in some instances, small exclusive
delays in approving subdivision stages, this period of reduced stock is more likely
banks of townhomes in established estates could provide the necessary further housing
due to developers withholding stock on existing estates as title timeframes have
options. Nevertheless, with interest rate rises set to continue into 2023, potential
stretched out beyond 15 months. This is exacerbated by the fact that no new estates
buyers may become more hesitant about entering the property market, producing price
came onto the market in Q3.
stagnation.
Even as new releases reduced considerably, gross sales have not absorbed the level
Despite a potential demand drop, there is still a pressing need for new lot supply across
of stock on the market, particularly with the sharp rise in lots returned to market over
Ballarat to maintain the area’s attractiveness over other areas on the fringe of Melbourne’s
Q2 and Q3. With interest rates on the rise and building costs continuing to climb,
west. The Victorian Planning Authority has now accelerated their focus on the northern
this back-to-back quarterly result may be the start of an ongoing trend.
growth area of the region which will bring much-needed new stock to an area that has been underrepresented for some time.
After quarterly price growth since 2019, the median lot price remained unchanged, as did the median lot size. This pricing reflects a 17.5% increase year-on-year. Interestingly, the price and size of unsold lots was $321,000 and 504sqm - both larger than the median. While the stock overhang tends to sit just above the sold lots, the divergence has increased in recent months, which highlights the impact of higher interest rates on borrowing capacity.
32 - RPM Group
BUYER ACTIVITY - BALLARAT GROSS LOT SALES 600
160 Gross Lot Sales A significant 36% reduction
500 400 300 200 100 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Western Region
Northern Region
Southern Region
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Eastern Region
STOCK OVERHANG - BALLARAT LOTS REMAINING AT END OF QUARTER 500
155 New Lot Releases
400 300 200
Overall stock levels remain depressed
100 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
ACTIVE ESTATES - BALLARAT NUMBER 30
448 sqm Median Lot Size
25 20 15
No change from the last quarter
10 5 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
MEDIAN LOT PRICE & SIZE - BALLARAT MEDIAN LOT SIZE (SQM)
MEDIAN LOT PRICE
$315,000 Median Lot Price A gain of 1.6% from last quarter
$350,000
540
$300,000
520
$250,000
500
$200,000
480
$150,000
460
$100,000
440
$50,000
420 400
$0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Median Lot Size
Median Lot Price
Q3 2022 - Greenfield Market Report - 33
REGIONAL
Bendigo Corridor Gross lot sales dropped by 36.4% this quarter to 70, but represented a 75% increase
OUTLOOK
year-on-year, following a record low level of stock available in Q3 2021 which severely limited buyers’ options. After back-to-back triple digit results to start 2022, the result for Q3 is an earlier indicator that activity will be modest over the short term.
With more interest rate hikes on the cards though to early 2023, there is a risk that demand may drop as prospective buyers consider holding off on purchase decisions to take advantage of anticipated market falls toward the end of 2023. Positively, now with notable land available in three regions of Bendigo, the necessary diversity of stock is in
With relatively robust stock releases this year, remaining lots at the end of the month stood at 121, which is the highest figure since Q3 2020. Bendigo’s northern region has long been the driving force behind all sales activity, but with stock coming online in the west at the end of 2021, sales have gradually risen outside the north. This is an important shift as the west offers more value for money with larger lifestyle lots and a lower price per square metre. Limited stock has now also been released in the east, another important product variation for the region catering to second or third home buyers, with premium lots and higher price points. Due to relatively low sales numbers this year, lot prices have fluctuated, but the median now sits at a record high, 4.7% above Q2 and a 62% increase year-on-year. Unlike many other regional areas, Bendigo’s lot sizes increased in Q3 by 8.2%, and 15% annually. And while price per square metre moderated this quarter, it’s still up 40.9% from last year.
34 - RPM Group
place to attract a wider range of households.
BUYER ACTIVITY - BENDIGO GROSS LOT SALES 400
70 Gross Lot Sales A decrease of 34 sales from last quarter
350 300 250 200 150 100 50 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Northern Region
Eastern Region
Southern Region
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Western Region
STOCK OVERHANG - BENDIGO LOTS REMAINING AT END OF QUARTER 400
97 New Lot Releases
350 300 250 200
Maintaining the share increase
150 100
observed last quarter
50 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
ACTIVE ESTATES - BENDIGO NUMBER 35
515 sqm Median Lot Size While volatility remains high, lot sizes are trending downward
30 25 20 15 10 5 0 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
Jun-21
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
MEDIAN LOT PRICE & SIZE - BENDIGO MEDIAN LOT SIZE (SQM)
MEDIAN LOT PRICE
$266,000 Median Lot Price
$300,000
700
$250,000
600 500
$200,000
400
$150,000
300
$100,000
A 4.5% increase from last quarter.
200
$50,000
100
$0
0 Jun-19
Median Lot Size
Sep-19
Dec-19 Mar-20
Jun-20
Sep-20 Dec-20 Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Median Lot Price
Q3 2022 - Greenfield Market Report - 35
F E AT U R E S T O RY
Townhomes in 2022 and beyond MELBOURNE MEDIAN PRICES
Imagine saving your hard-earned wages for a home in 2019. It doesn't feel like that long ago. Now add around 40% to the price leading up to, and through, a pandemic (now finally starting to fall), and eventually remove hundreds of thousands in borrowing power as interest rates increase to fight inflation across most of your daily
PRICE ($) $993,000
$1,200,000
$1,000,000
purchasing needs, and try to buy a home. $800,000
$648,500
Understandably, housing affordability is a persistent issue across the broader market nuanced by multi-layered economic conditions including income growth, cost of
$600,000
living, savings ability, repayment capacity, access to finance, purchase price and lender risk profiles.
$400,000
While house prices have softened in recent months, they still remain historically
$200,000
$376,000
high, and in conjunction with the above mentioned factors, have squeezed out many
alternatives.
$0 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
buyers from the metropolitan established detached market into more affordable
Melbourne House Price
36 - RPM Group
Melbourne Unit Price
Melbourne Land Price
Contemporary Living by Nostra, Cloverton.
THE NEW REALITY FOR PURCHASERS Inflationary pressures and the global normalisation of cash rates is driving up interest rates, and in response, house prices are moderating. But for many buyers, the property
2.85%
Up to 3.75%
Current Cash Rate (November 2022)
Major banks are forecasting a peak cash rate of up to 3.75%
price reductions are of limited benefit, given the impact of reduced borrowing capacity from increasing interest rates and elevated cost of living. For renters, the impact is even greater, with rising rents placing an additional cost hurdle on the path to purchasing a home. The impact of reduced purchasing power is anticipated to only get worse through the next 12 months with higher interest rates expected into 2023.
-$180,000 Borrowing capacity since April*
-$30,000 If the rate increases another 25 points in December to 3.10%, borrowing capacity would reduce again**.
Within this framework the provision of diverse housing options has been, and will continue to be, critical to support housing access amid affordability constraints, while still satisfying local amenity and liveability demands.
** This considers a household with average expenditures as defined by the Household Expenditure Survey (HEM) and 10% deposit. Based on a household income of $100,000. Q3 2022 - Greenfield Market Report - 37
THE NEW PROTAGONIST TOWNHOME APPROVALS AND PRICE SPREAD BETWEEN HOUSES AND UNITS
Townhomes play a crucial, and often overlooked, role in supporting healthy dwelling supply. Perhaps more importantly, townhomes provide an affordable option to
TOWNHOME APPROVALS
MEDIAN HOUSE AND UNIT PRICE GAP
prospective buyers navigating ongoing and ever-changing market challenges.
14,000
$525,000
There is increasing acceptance of townhomes as an alternative housing product,
12,000
$450,000
10,000
$375,000
8,000
$300,000
6,000
$225,000
4,000
$150,000
2,000
$75,000
particularly as the price gap between houses and units remains wide. While this disparity is likely to narrow as interest rates continue to rise, an affordability gap will remain across the market, especially in conjunction with additional inflationary and cost of living pressures. Spillover pricing pressures from the established market and elevated building costs have placed affordability pressures on greenfield markets, creating a strong value proposition for townhome alternatives, and savvy developers are already responding by diversifying their product offering.
$0
0 08
There is a clear role for townhome products to support both supply and value perspectives across the Melbourne market. This is increasingly critical across a maturing
09
10
Approvals - Semi Detached (LHS)
11
12
13
14
15
16
17
18
19
20
21
22*
Price Spread (RHS)
greenfield market where standard house and land products are becoming less attainable for a growing circle of purchasers. A COMPELLING COMBINATION OF DETACHED HOME AMENITY, INCLUDING:
Potential for separately titled lots 38 - RPM Group
Private open space
WHAT MAKES PEOPLE CHOOSE TOWNHOMES? When it comes to understanding townhome buyers RPM has a deep understanding of what makes purchasers tick. Some key insights from these buyers through 2022 show: •
25% value ‘location’ as a primary motivation to buy
•
25% value ‘affordability of product’ as a primary motivation to buy
•
53% of purchasing households earn $60,000 to $120,000
•
47% spend $450,000 to $550,000.
Townhomes provide an opportunity for aspirational buyers to enter the market. The pricing expectations of buyers remain at accessible levels despite the potential for reduced purchasing power from expected interest rate rises into the future.
Highlights from RPM’s consumer purchaser surveys in 2022
Private offstreet parking
Large internal living areas
Flexible design options
Lower maintenance
Q3 2022 - Greenfield Market Report - 39
Outlook Anticipated weak purchaser sentiment through 2022 and into 2023 will be underpinned
leading to a land-to-house ratio 3% above the 35% equilibrium, although this is still below
by aggregate challenges, many unique to the new home market.
the 40% threshold which has a greater impact on affordability.
The Consumer Price Index (CPI) escalation in Q3 exceeding predictions has exacerbated
Focus on mechanisms to assist purchasers entering the new home market will be crucial
borrowing capacity risk for purchasers. Additionally, another 25 basis point cash rate rise
in the short to medium term, including affordable product options like smaller lots and
is anticipated in November, and major banks are now suggesting the RBA will need to
townhomes, and reducing deposit terms to lower the upfront outlay. There is also extra
undertake additional rises to bring inflation under control. To achieve the target range of
assistance available through the Victoria Homebuyer Fund and the national Home
2% to 3%, given it currently sits at 7.3%, the cash rate peak in 2023 is likely to be higher
Guarantee Scheme to supplement purchaser deposits.
than previous projections.
Net overseas migration, a key source of new home demand, rebounded immediately
Another major concern in the coming months is the deterioration of the new home
after international borders reopened in early 2022, with an above average net inflow of
market’s affordability advantage over established markets. While the upward trend in
32,014 in Q1. This will be important in offsetting weaker local demand to support sales
lot prices halted in Q3, the median lot price is holding up exceptionally well despite
activity going forward. Additionally, many of the pandemic-driven factors that increased
headwinds, only edging 0.8% down from the record high of the previous quarter. This
desirability of new homes in growth areas (such as the need for more space for remote
compares to a sizeable 7.4% quarterly correction in Melbourne’s median house price,
work) remain relevant and will continue to drive appeal.
40 - RPM Group
For further insights or bespoke analysis, contact our Research, Data & Insights Team
Michael Staedler
Andrew Raponi
Jonathan Mayes
Group Manager
Research Manager
Research Manager
- Research, Data & Insights
a.raponi@rpmgrp.com.au
j.mayes@rpmgrp.com.au
m.staedler@rpmgrp.com.au
Q3 2022 - Greenfield Market Report - 41
42 - RPM Group
Q3 2022 - Greenfield Market Report - 43
Our Team HELPING YOU UNLOCK YOUR PROPERTY POTENTIAL. GET IN TOUCH TODAY.
Peter Brannighan
Gary Dunne
Ed Wright
Chairman
Chief Executive Officer
National Director
peterb@rpmgrp.com.au
gary@rpmgrp.com.au
Transactions & Advisory
+61 418 442 661
+61 410 548 025
edwright@rpmgrp.com.au +61 416 445 078
44 - RPM Group
Luke Kelly
Peter Grant
Michael Staedler
Managing Director
Managing Director
Group Manager
Project Marketing
Business Development
Research, Data & Insights
luke@rpmgrp.com.au
peter@rpmgrp.com.au
m.staedler@rpmgrp.com.au
+61 400 688 520
+61 411 494 499
+61 434 619 280
Rod Anderson
Jane Ormerod
Andrew Swinson
Managing Director
Head of Property
Director
Communities
Management
Wealth Managment & International
rod@rpmgrp.com.au
jane@rpmgrp.com.au
andrews@rpmgrp.com.au
+61 417 595 859
+61 488 210 951
+61 488 123 739
DISCLAIMER Although all reasonable care has been taken in the preparation of this document, RPM Group takes no responsibility for the accuracy of the information contained herein. It is recommended that all the information be verified if it is to be used for commercial purposes.
Q4 2021 - Greenfield Market Report - 3
+61 3 9862 9555 Level 5, 52 York Street South Melbourne, VIC 3205 rpmgrp.com.au
