Surging land prices are putting a major dent in Melbourne’s status as the country’s most affordable new-housing market and making it harder for first home buyers to get a foot on the ownership ladder.
New figures released by project marketers Red23 show that over March, Melbourne’s median land price rose $300 a day (or $9000 for the month) to $258,000, pushing the total cost of a new three or four-bedroom basic home to around $500,000.
While a similar new Sydney home in the outer western suburbs would cost about 40 per cent more, the gap between the two cities is closing.
The jump in land prices in March means the median price of a Melbourne lot has risen 8 per cent in the first three months of the year, double the rate of growth recorded for established houses in Melbourne over the same period (according to figures from Fairfax-owned Domain Group’s State of the Market report).
Red23 research head Andrew Perkins said the ‘‘sheer weight of population growth being absorbed in Victoria’’ – more than a third of Australia’s total population growth – was driving demand for 22,000 dwellings a year with developers ‘‘capitalising on tight levels of supply and increasing prices’’.
Recent increases have done little to stifle demand with sales volumes remaining strong . . . All things being equal, Melbourne land prices are not at their peak yet,’’ Mr Perkins said.