Land prices shoot up in Geelong, now more expensive than Melbourne

The cost of land on the urban fringe of Geelong has overtaken Melbourne for the first time, and the trend is tipped to continue.

Land prices on the urban fringe are more expensive in Geelong than Melbourne for the first time, says a new report.

And it’s tipped that the trend could continue for some time as Melbourne continues to lose population related to the pandemic while the appeal of Geelong grows.

Melbourne’s median lot price for the March 2022 quarter was $370,000, compared to $377,000 for Geelong, according to the latest greenfields market report by property analyst Research 4.

Geelong’s new land price has shot up from $295,000 just under a year ago amid strong demand for housing in the region.

Paul and Aimee Wheate with their kids, Beatrix, 4, Myles, 7, and Eliana, 10, at their house in Armstrong Creek outside of Geelong. Picture: David Geraghty

Research 4 director Colin Keane said interest in the Geelong market had been escalating even before Covid hit.

“People are moving down there not for affordability, but for lifestyle,” he said.

“The supply has been run down, the number of projects operating has been falling away very quickly.”

“And we’re at that point now where developers simply can move their prices up.”

A new housing development being built in Taylors Lakes, in Melbourne’s northwest. Picture: Luis Enrique Ascui

Melbourne experienced record land sales during the height of the pandemic, but there was a 28 per cent drop in the March quarter.

“The drop in demand is expected to be driven by a continuation of negative interstate migration, impacts from pulling forward demand from the past two years, and population outflows driven by the opening of international borders,” the report said.

It said that despite the fall in sales, the greenfield market still comprised about half of Melbourne’s total demand for housing.

Mr Keane said that Geelong’s urban fringe – which accounted for up to 12 per cent of total Melbourne housing demand – needed more supply of blocks.

“The Greater Geelong Council know where the land is going to go, but they haven’t fast-tracked that approval process to get it into the hands of a developer to make it market ready,” he said.

Peak developers’ group the Urban Development Institute of Australia agreed.

“Geelong combines affordability, lifestyle and an easy commute to Melbourne, meaning demand for homes has accelerated over the past two years, as people reconsider what’s important to them,” said UDIA state CEO Matthew Kandelaars.

City of Greater Geelong acting director city planning and economy Brett Ince said the council approved a record 4466 dwellings in 2021 – a 27 per cent increase on 2020.

“The City is working in conjunction with other levels of government and the development community to meet the demand for new homes and services,” he said.

Much of Geelong’s population growth is being directed towards Armstrong Creek, and the growth areas near Lovely Banks and Batesford.