Geelong developers are offering big rebates to attract customers amid slow demand for land.

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Block returns in Geelong’s greenfield developments outstripped new lot releases in the March quarter as sustained weak demand continued to hurt the new land market.

The region is the only Victorian growth corridor where buyers handed back more parcels of land than developers put up for sale, according to RPM’s Q1 2024 Victorian Greenfield Market Report.

Stock returns jumped 23 per cent to 97 lots, with the release of only 89 new blocks over the same period further compounding supply constraints.

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The reports paints a challenging picture for Geelong, where sales plunged 28 per cent to reach a new long-term low.

There were just 98 lot sales recorded in the three months to March, 46 per cent less than the prior corresponding quarter.

The slump in demand pushed out the average time between lot releases and sales to 211 days, the longest of all the Victorian growth corridors.

RPM general manager research, data and insights Michael Staedler said Geelong developers were offering some of the highest rebates in the state — up to $40,000 or $50,000 — to entice land buyers.

But he said there was still a gulf between the discounted prices and people’s borrowing capacity that was hampering the recovery.

Land sales in the Geelong growth corridor remain slow.

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“Geelong has got some work to do, it will be the longest market to correct, without a doubt,” Mr Staedler said.

“Ultimately it’s going to come down to a handful of developers, particularly the listed ones, doing large rebates to keep the stock moving and they need to remove the stock just hanging there before that release new stock.

“That new stock is going to market at a cheaper price point, it’s going to be smaller so it’s going to be more conducive to the market, but there’s a lot of first-time developers and smaller developers that are not going as hard as they need to meet the market from a discount perspective.

“That needs to happen otherwise we are just going to muddle around down the bottom into next year.”

First-home buyer Beth Crosby used Villawood’s Care Workers Support Program to buy land and build in Mount Duneed.

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He said cancellations across the board had jumped from normal levels of about 15 per cent to 40 per cent as buyers who purchased at the back end of the HomeBuilder Grant had their land valued and found their borrowing capacity now fell short.

“Cancellations are still lower than 2017, 2018, 2019 when we had a huge amount of speculators in the market,” he said.

“The difference now compared to then is that these are owner occupiers, they are not speculators trying to make $10,000, these are the ones you have a high level of sympathy for because you know their financial circumstances have changed.”

The report shows Geelong’s median lot price rose 3 per cent in the March quarter to $406,000, making it the state’s second most expensive corridor behind the southeast.

Upsizers are driving demand at the Gen Fyansford estate.

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However, factoring in a 9 per cent rise in median lot size to 437sq m, the price per square metre actually fell.

Mr Staedler said this reflected the shift in demand for greenfield land from the traditional first-home buyer market to upsizers.

Statewide, there were positive signs with lot sales up 7 per cent over the 12 months to March on the back of slowing inflation and increased developer incentives.

Mr Staedler said tax cuts to take effect from July 1 would also boost many people’s borrowing capacity.