HomeBuilder subsidy misses Victoria

Real estate developers sold 1,154 housing lots across Melbourne and Geelong in August, according to residential land sales specialist Red23. This compares with more than 1,600 sales per month in June and July. However, median lot prices rose by 0.3 per cent to $321,000 in August.

The fall in sales was attributed to buyers not being able to find lots that are eligible for the federal government’s $25,000 HomeBuilder scheme during Victoria’s second coronavirus lockdown:

A similar slump does not appear to be occurring in Sydney, with developers continuing to report strong sales momentum. Melbourne is the country’s biggest residential land market.

Jonathan Atchison, a director at Wolfdene, said the Red23 figures were consistent with what the land developer had experienced across its portfolio of projects…

In June and July, Wolfdene completed 250 sales, an average of more than 30 deals per week across its five live projects.

“We then experienced a massive drop off through August due to the state government introducing COVID lockdown measures.

Under HomeBuilder, buyers must sign a building contract by 31 December to qualify. They then have six months — three months more than other states — to begin construction.

This leaves Victorian buyers around two months to secure a property under the program, meaning many will likely miss out because of the lockdowns.

Not that anybody should be too concerned. Victoria is headed into a gaping housing oversupply as population growth collapses:

Victoria is facing an enormous supply glut with 51,000 net dwelling additions versus 13,000 population growth forecast in 2021 and 48,000 net dwelling additions versus 30,000 population increase forecast in 2022.

There will be choice galore for any Victorian seeking to buy a home.

Unconventional Economist
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