Villawood says speculators selling off its Melbourne land lots for profit
Speculators are snapping up land lots in Melbourne and then selling them for higher prices to cash in on the surge in lot prices in the city’s outer suburbs.
In response, Melbourne greenfield developer Villawood Properties has changed its sales contracts to block sales on its land lots by speculators.
Villawood says it is illegal, with the main driver being the recent rise in prices of land lots in Melbourne and record low supply.
Prices are up $27,000 since the start of the year and heading towards a median of $300,000, according to project marketers Red23, The Australian Financial Review reported.
The law firm which draws up Villawood's contracts flagged the issue of purchasers nominating an alternative buyer.
There are more than 250 lots for sale on Gumtree, with most of the contracts yet to settle.
"Speculators are buying lots because they are seeing that prices are going up. They are then reselling the contract for tens of thousands of dollars before they settle," Villawood founder and executive director Rory Costelloe was cited as saying by the AFR.
"I met a guy in the Good Guys recently, who told me he had paid $30,000 to buy a contract for one of our lots.
"We've had advice and believe it's not legal to nominate another buyer for profit."
Prolonged wait times for new lots to be titled – up to 18 months – is also driving some buyers to sell their lots to other parties.
Costelloe said Villawood doesn’t “want speculators in our estates”.
“We want to sell lots to people who are going to build their homes on them," he said.
Villawood Properties changed its contracts last weekend so that only immediate family members can be nominated as an alternative buyer.
The developer, one of the biggest in Victoria with 22 estates, will also restrict families to buying only one lot per new land release.
In one example, a buyer called "Isabelle" sold the contract to a lot in Villawood's Elements Estate in Truganina for $260,000. She bought it for $220,000 less than a year ago.
Another Gumtree vendor, "Sumit", told the AFR he was selling because his developer kept on delaying the titling of his lot.
"It was meant to be last November. Then they moved it to January, then March, then May. Now they are saying August."
Gumtree vendor "TK" said he was selling his lot in Merrifield in the northern suburbs because he had bought a bigger site elsewhere.
"I bought this site not even a year ago for $450,000. Now the same lots are selling for $550,000."
