In good times land sells homes and in tough times homes sell land, according to prominent Australian greenfield developer, AVID Property Group (AVID).
AVID Project Director Anthony Demiris said biting interest rates and inflation were seeing a tightening of borrowing capacity and a push back to demand for smaller land lots.
“The market has seen an important recalibration over the past six months or so, particularly for new home buyers who were being priced out of the market and pushed into an oversaturated rental space,” Mr Demiris said.
“We’re still seeing strong enquiry, and despite a sentiment shift over late-2022 and early-2023, the regional markets in which AVID operates still remain stronger than their pre-pandemic levels.”
Mr Demiris said the market’s demands were changing, and whilst land was selling houses for the last two years, it has now seen a shift to houses selling land.
“It’s a normal occurrence in a slower market – buyers are rightsizing, and they’re not necessarily happy about it, but they still want the top-end housing inclusions so in its place are forgoing land space,” he said.
In 2022 AVID was selling out of its largest blocks soonest. The developer reacted to the shift in demand by reconfiguring 28 smaller blocks into 20 larger blocks at its flagship community, Harmony on the Sunshine Coast, which saw the largest premiums of any product at the 4,600-block community.
“It’s now the opposite of what we were seeing prior to mid-2022, where buyers would rather have the butler’s pantry, floor to ceiling tiles and all the bells and whistles, and if that means the land they can afford is 100 sqm smaller then they’re willing to make that sacrifice,” Mr Demiris said.
AVID has seen sales for smaller blocks trending higher in the 2022-2023 financial year, with settlements on blocks of 350 sqm or less up around 5 per cent on the previous financial year, and enquiries for these block sizes increasing.
Mr Demiris said newly completed homes were hitting a sweet spot with buyers who were looking to get out of the saturated rental market.
“There is a rare window now where new home buyers can secure land at the right price,” he said.
“That said, demand remains and there is an entire industry still playing catch-up, so a bit of patience is needed.
“But the current market presents a good opportunity for those who want to lock in land at today’s price to settle in six or twelve months when we expect interest rates will start to stabilise, and once home builders have had the chance to work through the backlog.”
For more information about Harmony please visit https://www.harmonyliving.com.au/.
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