- Oliver Hume Research has reported a decline in enquiries
- Higher interest rates and cost of living pressures are suggested to be the source of changing conditions
- The portion of first home buyers in the Victorian greenfield market declined in May
The Victorian greenfield market has felt the sting of increased interest rates and cost of living pressures with Real estate services group Oliver Hume Research reporting a decline in enquiries over the month of May.
The Victorian greenfield market refers to former rural land in Melbourne’s growth areas that is being developed for housing.*
Market enquiries for the greenfield market were 26% lower in May compared to April in the largest monthly decline over the last year. Oliver Hume Research also reported a 24% drop in reservations.
New Enquiry Volume % Change – Compared to Previous Month
Oliver Hume CEO Julian Coppini partly attributed the changing market conditions to the Federal election in May which he believes may have impacted buyer sentiment.
“Conditions in the Victorian greenfield market continued to moderate in May as buyers adjusted to higher interest rates, rising inflation, cost of living pressures, ongoing affordability challenges and more stock being offered in the broader residential market.”
Julian Coppini, Oliver Hume CEO
While enquiry volume for the Victorian greenfield market was down in May, the time taken from enquiry to purchase remained consistent.
“Most buyers continued to purchase either within 7 days (around 26% of all lots sold) or 8 to 21 days (around 30%) after enquiry,” Mr Coppini said.
Time from Enquiry to Purchase
In May investors accounted for 37% of all buyers, up 5% from the previous month. Simultaneously the portion of owner-occupier buyers declined 5% to 62%.
“Rising yields due to higher rents and lower prices may prove attractive for some investors,” Mr Coppini said.
He indicated that he believes investor confidence will be boosted by low unemployment, the return of international migrants and an improving economy.
The decline in the portion of owner-occupier purchases was coupled with a decline in First Home Buyer purchases in the Victorian greenfield market.
“Higher interest rates will exacerbate affordability challenges for first home buyers in the short to medium term. However, there might be some relief given various policy initiatives,” Mr Coppini said.
One such policy is the Victorian Homebuyers Fund (VHF) announced in 2021. Worth $500 million, the scheme is designed to help Victorians to enter the property market.
Another is the shared equity scheme announced by the Anthoney Albanases shortly after he was sworn in as Prime Minister.
“Over the medium to long term, the continuing economic recovery and the reopening of international borders will provide significant tailwinds for the greenfield and broader residential property markets,” Mr Coppini concluded.
*Oliver Hume Research analyses data from the Victorian greenfield municipalities including Geelong, Wyndham, Melton, Hume, Whittlesea, Cardinia and Casey.
