$40K rebates drive Geelong sales as builders ‘pray’ for rate cuts
Developers put incentives worth up to $40,000 on the table to entice new home buyers as builders are “hoping and praying” an interest-rate cut givers buyers a shot of confidence.
Homebuyers scoring incentives worth up to $50,000 are leading to a surge in land sales in Geelong, new figures reveal.
The Red23 research shows the number of land sales rose 16 per cent in Geelong at the end of 2024, attributed to the amount of rebating offered to entice homebuyers back to the market.
The rise is from a low base, with sales still 50 per cent below long-term trends in Geelong, but the industry hopes an expected interest rate cut can improve buyer confidence.
The research shows the median land price in Greater Geelong reached $420,000 – a 2.26 per cent rise over 12 months, while existing homes have become more affordable options.
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Major developers in the region, such as Villawood Properties, Stockland and Dennis Family Corporation, are offering rebates and incentives up to $40,000 to people who purchase residential land, especially titled lots, in their estates at Armstrong Creek, Mount Duneed and Lara.
With a $10,000 government grant, eligible buyers can access up to $50,000 in incentives to build their first home.
Red23 managing director Terry Portelli said buyers were responding to incentives and titled stock was attracting stronger interest, though affordability issues remained for buyers.
Villawood Properties executive director Rory Costelloe said builders were “hoping and praying” a cut in interest rates next week might bring more buyers back.
“There’s a real buzz among builders because they’re not making sales at the moment and desperately need this rate change,” he said.
Builders’ sales rates had been 50 per cent down on the previous decade average and “everybody’s just hoping we can get the affordability back into the market”, Mr Costelloe said.
“Developers have come to the party and lowered their prices. Some of the road contractors are starting to lower their prices. The subbies building the houses are lowering their prices. We’re still waiting on the suppliers to lower their prices,” he said.
“But everybody’s really counting on the RBA giving at last one rate cut – followed by others in a reasonable time to come – to get some activity back into the market.”
Mr Costelloe said about 50 per cent of land stock across Villawood’s estates, including Armstrong and Coridale at Geelong, was selling with some kind of rebate, such as for care workers and for titled stock.
He said it was time the Australian Prudential Regulation Authority relaxed the 3 per cent serviceability buffer that banks must assess borrowers’ ability to pay as interest rates have peaked.
Returning to the pre-covid 2.5 per cent buffer would open the door to more people buying a home.
“In a lot of instances people have looked at a home loan calculator to see what they could afford, come into a sales centre to put a deposit on a block and then when they see their mortgage broker they get whacked with the 3 per cent margin and are told they can’t afford it, so they ask for their deposit back,” Mr Costelloe said.
“There is zero reason to maintain a 3 per cent buffer – those people are trying to a buy a house and it could be the difference between approval and not. It’s not inflationary, it’s just allowing people to actually get into the housing market.”
Originally published as $40K rebates drive Geelong sales as builders ‘pray’ for rate cuts