What is happening at the land sales offices on the fringes of Melbourne? Here’s some insight from what we’ve recently seen.
The media likes to tell us how bad things are, but that is not what we are witnessing on the projects we represent.
I have been in the land sales space for over 40 years and have seen several slowdowns in the market. Generally, when the market turns downward, the enquiry rate from potential land purchasers either grinds to a halt or is extremely low. This time around, we are experiencing very steady enquiry rates. Yes, there are fluctuations with enquiry numbers; however, the overall volume remains. Although it has been challenging to convert enquiry to sales, quality sales are still achievable where suitable land product is on offer – so adjustments have been required on each project, ensuring a diversity of stock is always on offer.
Our land enquiry rates are still considerably higher than pre-COVID levels, indicating the depth of the market. While many are hesitant to buy because of increasing interest rates and lack of confidence in the liquidity of building companies, these two areas of concern will ease over the coming months, and the enquiries we are speaking with today will eventually convert to sales.
Currently, the enquiries we receive are dominated by investors and first home buyers; second home buyers are relatively scarce. As rent yields continue to increase, we expect to see even more investors enter the land market. Add to this the return of migrants, and I believe we will see continued steady demand.
The boom is over; however, the entire residential industry has been brought-forward due to historically high sales over the COVID period. There is a substantial backlog of lots to be constructed, so this is an excellent time for the market to settle and return to normality without sacrificing respectable sale volumes.
