The average time on market for new land offered in Melbourne’s growth corridors is coming close to just 60 days, having hovered around 180 days through most of 2013, new research from property group Oliver Hume has shown.
Thousands of transactions from more than 130 active projects were analysed as part of the research, which shows that in the second quarter of 2016 the average time on market for land in Melbourne was at a record low of just 2.1 months.
The average time on market has now fallen or remained steady every quarter since the third quarter of 2013, with the exception of Q1 of 2015 where there was a slight increase. The current cycle reached its peak of 6.6 months at the end of 2012.
The time on market is measured from when a piece of land is released for sale by a developer to the point when it is contracted by a purchaser.
Oliver Hume Research Manager George Bougias said demand was being driven by the affordability of land in Melbourne, especially when compared to other major metropolitan cities such as Sydney.
“When the market is in equilibrium land generally sells between 3-5 months after being released,” he said. “The fact we are now down near two months shows demand is continuing to outstrip supply.”
“This record low can be attributed to several factors, but primarily it is a function of robust population growth, the declining cost of borrowing and increasing levels of consumer and investor confidence due to the improving Victorian economy,” he said.
“Affordability is a key factor which is underpinning demand as well,” he said. “Melbourne is much more affordable than Sydney and relatively attractive compared to many other capital cities and attracting buyers from all over the country.”
“We expect the time on market statistic to stay relatively low for the rest of the year before heading back to more traditional levels in the medium term,” he said.
Oliver Hume Director Paul Ciprian said there was a healthy level of competition to keep prices in check even in a climate of strong demand and increased volumes.
Author: Master Capital Group