COVID-19 will affect Melbourne’s new homes market in a variety of ways, but could be good news for those still looking to buy.
Victorian builders face a more than 16,000 home shortfall this financial year and a decade long headache caused by COVID-19.
But those looking to buy a new home could be thousands of dollars better off by 2021.
New figures released yesterday by the Housing Industry Association show Australia’s new homes pipeline will be 28,000 starts behind pre-virus expectations by 2030.
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Melbourne will be the nation’s hardest hit city in the short term, with almost 13,000 apartments to be wiped off builders’ books by July next year.
HIA chief economist Tim Reardon said while this would see some builders relocate from Melbourne to Perth, it would also see builders offer lower prices to compete for fewer buyers.
It should also mean homes were built faster, Mr Reardon said.
More competition between builders should benefit Victorian homebuyers.
Separate figures from Research4, which specialises in land sales, forecast the city’s $320,000 median block of land will fall $4000 by the end of the year and a further $2000 by March 2021.
Speaking at an Urban Development Institute of Australia Victorian chapter event yesterday, Research4 director Colin Keane said developers would need to match falls in the wider real estate market.
While this would be a “distant second prize” for buyers who missed out on $25,000 HomeBuilder grants on offer this year, he warned hundreds hoping to get the cash would miss out due to time constraints.
Mr Keane forecast Melbourne developers working through the lockdown could produce up to 3700 lots that would be titled for building to commence within the scheme’s timeline. This includes several hundred that had been rejected by buyers for months already due to issues with their shape or location.
He estimated up to 4400 potential customers seeking HomeBuilder eligible blocks could emerge in October after waiting out the current stage four lockdown, but any left behind would not return until at least March next year.
“There’s likely to be insufficient land or builders won’t be able to start work in time,” Mr Keane said.
“So that demand will either walk away or buy without the grant. And I think most will take their time.”
Victoria’s land developers will work to title as much land as possible before HomeBuilder grants are removed from the market at the end of December.
Urban Development Institute of Australia Victorian chief executive Danni Hunter said the new figures highlighted the need for government and industry to have “all the cogs in the wheel working to get as much titled land to market as possible”.
“This will help as many Victorians have the opportunity to get their hands on that money as possible,” Ms Hunter said.
She added that for those unable to do so, the aftermath of COVID-19 would provide ideal buying conditions.
“It will be a really fantastic time for buyers to get into their new home, mostly because of the competition we think there will be,” Ms Hunter said.
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