In the first three months of 2024, more foreign investors bought properties in a new Victorian development than local investors did. A report from a major bank shows that fewer first-time home buyers are purchasing new builds, putting pressure on affordable homes in the city.
According to the NAB Residential Property Survey, only 8.6% of new home sales were to investors, while 10% were to international buyers. The share of new home sales to first-time buyers dropped to 22.1%, the lowest in the country, compared to over a third for established homes.
Just 3.8% of established homes sold in Victoria went to international buyers during this period. Chief economist Alan Oster predicts a 2.5% increase in Melbourne home prices and a 4% rise in rents.
Most survey respondents believe building in Victoria is too expensive, supported by data showing the average construction cost for a new house approved in April was $478,000. However, there’s an increase in buyer demand, with a 90% rise in pre-approvals reported by Loan Market.
Despite higher listings for winter, there’s a strong demand for homes, with a 66% clearance rate at auctions. In the western suburbs, clearance rates are even higher, with almost 90% recorded in some areas. Many homes in this region are sold within the $400,000-$600,000 price range, indicating a preference among first-time buyers for established homes over new builds.
Additionally, up to 50% of weekly auctions are being sold ahead of schedule, possibly due to advice from lenders cautioning first-time buyers against purchasing at auctions.
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