By Melissa Heagney/Domain

 

Land prices in Melbourne’s growth belts have fallen over the March quarter, with pre-election jitters and tighter credit conditions taking their toll.

Even though the more affordable regions on Melbourne’s outskirts have been in demand, median lot prices across seven key local government areas dropped by 2.7 per cent to a median of $325,000, according to Oliver Hume’s Quarterly Market Insights report.

Melton experienced the fifth highest drop in median lot prices, with a 1.7 per cent drop in the March quarter to a new median of $295,000. Nearby Wyndham fell by the same rate to a median of $325,000.

Casey experienced the biggest drop in Melbourne, falling by 5.8 per cent in the March quarter.

The fall followed the overall trend of Melbourne’s cooling market, where house price medians also dropped by 2.4 per cent in the first three months of this year.

Developers have also been offering incentives such as low-cost builds in select areas or the chance to buy with a small deposit amid the weak market.

Oliver Hume national head of research George Bougias said it was taking longer for transactions to complete in the slowing housing market.

But Melbourne’s growing population meant there was still demand for house and land packages.

He said the average time on the market had jumped from record lows of 20 days early last year to an average of 90 days in the March quarter, bringing the days on the market back to typical historical averages.

He also said volumes of sales in the March quarter were the lowest since early 2013, but he expected the market to improve from here.

“We consider sales volumes have probably now bottomed out and should gradually increase over the short-term as lending conditions continue to ease and buyer confidence improves,” he said.

“The underlying strength of the Victorian economy and a growing population also provide reasons to be more positive about the future.”