I have been involved in the residential land industry for more than 36 years and have never seen a market as strong as we are seeing at present.
There are many saying there will be a correction or a crash and while everyone has an opinion of where the future is headed, I believe this market is very different to what I have seen before.
In 1989 we experienced the largest correction in the residential land industry I have seen in my life time. Interest rates were around 18% (almost impossible to believe today), we had very little migration from overseas and virtually no migration from other states of Australia. The land market was fuelled by greedy investors who had no intention of building a home, they were purely riding on the back of increasing land prices. This market had to come to an end and when it did many companies and individuals were hurt badly.
Today we are experiencing unprecedented low interest rates, strong migration from both overseas and interstate, and our Government is supporting the industry by way of generous first homebuyer incentives. The incentives include $10,000 first home owner grants for buyers of new homes in metropolitan Melbourne and $20,000 grants for those in regional Victoria. The regional areas start as close to Melbourne as Wallan or Bacchus Marsh. The increase in the home grant will come into effect on the 1st July 2017. In addition to this, first homebuyers will not pay stamp duty on their land purchase from the 1st July 2017. Of course, there are some conditions to these schemes but they are very fair and will see more first homebuyers entering the market come the 1st July.
On the projects Latitude Real Estate are selling – we are seeing a growing number of purchasers coming down from Sydney to purchase here as prices are no longer affordable on the outer fringes of Sydney. I have never seen this trend occur before. Whilst migration continues into Melbourne and we have continued low interest rates and generous first home owner grants these is no need to be concerned.
Now let’s have a look at the west of Melbourne, we have seen massive growth in the volume of land sales and prices escalating in areas such as Rockbank and Tarneit. It has been incredible! People just keep queueing up to buy as prices keep increasing. The market always sees value in an emerging market that represents value. A good example is Melton, whilst it has had great facilities and infrastructure for many years it has traditionally been a slow market for land sales. Very recently that trend has changed and the smart buyers are recognizing the value it represents and there are developers such as Yourland who saw it coming and wanted to create a better-quality project in an area that traditionally developers didn’t want to deliver quality.
In July, Yourland is releasing a project on Exford Road which will be known as Seventh Bend. To give you an idea of how well it has been received in the first few weeks of promoting it – leading up to the launch in mid-July, we have received approximately 700 enquiries in just 3 weeks. I have never personally seen enquiry like this before which flags the fact to me, that Melton has come of age and those now buying are seeing the value in the cheap prices, and in turn will come out in front. This is a lot smarter than buying in locations that have already had a strong run of capital growth.
For those of you who don’t know, Melton is 45kms west of Melbourne’s CBD and has become a commuter town in the Melbourne – Ballarat growth corridor. People are moving to Melton as prices in Tarneit and Rockbank have increased in the past 24 months by approx 30%. A 448 square metre block in Tarneit in April 2017 was sold for $289,000 – in April 2015 they were priced at $209,000. Melton’s population is 138,641 as of the 30th of June 2016. It is estimated that by 2041 it will be more than 347,700 – making it almost the size of Canberra today.
The train line out to Melbourne’s west will undergo a massive upgrade. $518 million will be spent to duplicate the line to Melton and onwards to Ballarat. New crossing loops, carparks, platforms and stabling will also be built. This will mean more services will run to the west.
Within the City of Melton 11 new suburbs have been established across the corridor between Melton Township and Caroline Springs such as Plumpton, Rockbank and Truganina. Changes are needed to ensure that population growth does not push suburb densities beyond 20,000 residents, and to ensure that neighbourhoods and geographic characteristics are recognised as being unique. Melton is expected to see a lot of change and growth in the coming years, which will make it a big community/business centre within Melbourne.
Latitude is excited to launch Seventh Bend Estate which is located in the suburb of ‘Weir Views’ (Exford Rd, Melton South). The developer, Yourland, says ‘it’s urban living in a natural setting’, there will be new pathways, playgrounds, sporting fields, landscaped wetlands, vast open spaces as well as the neighbouring major public park to explore.