Lots of losses not all bad news, giving buyers big chance without speculators
A slump in new house and land prices is giving the city’s new homebuyer hopefuls their best chance to buy a block of land in years.
Of the 800 blocks put up for grabs across the city’s growth corridors in March 200 were blocks that have been returned to the market, according to new figures from Research4.
The blocks are coming back for sale as past buyers — mostly from sales last year — reach settlement and discover the land is worth less than they paid for it.
RELATED: Banks short-change buyers, force lots of land back up for sale
Buyers caught between a small block and a hardly affordable place
Time travelling home prices open door for first-home buyers in their 60s
Research4 director Colin Keane said the typical lot in Melbourne’s new housing estates was now $40,000 overvalued compared to where it normally sits against the city’s median house price.
With the city’s established house prices falling further, putting more downward pressure on land prices, speculators with their eyes on the 30 per cent growth in land prices seen across 2017 are now choosing to forfeit thousands of dollars in deposits rather than settle a block and sell it for a larger loss.
Mr Keane said those buying today were not only getting a better price, but were no longer competing with these buyers intent on “flipping” their lot for a profit — and driving up prices in the process.
Other blocks were being returned because builders were being turned off taking on extra projects by extra difficulties negotiating loans.
Some new home buyers were also opting to lose their deposit in favour of buying a cheaper block today, though the vast majority were proceeding to build a home, Mr Keane said.
While land prices could fall further, unless the state’s planning authorities and developers opened about 17 new estates this year the city’s rising population would drive prices up within five years.
“To mums and dads, the word of caution is that you have been battered around by people making it even harder for you to buy, don’t take your eye off the ball — persevere,” Mr Keane said
“When the pent-up demand kicks in it will catch the market by surprise and land prices will go through the roof.”
MORE: Physio to the stars looks to unload Caulfield North home
‘Celebrity lifestyle’ for sale with Gold Class mansion in Balwyn North
Ringwood Residences brings New York to Melbourne’s outer east