An aerial view of the planned Thornhill Gardens estate from its new developer’s website.
About 150 Melbourne homebuyers left in limbo for as long as five years after the housing estate they bought into stalled, will soon be getting their homes.
And the Melbourne developer that took on the site has revealed they’re forgoing somewhere between $11.6m and $20.3m by honouring the old contracts in a move they hope will help boost confidence in the sector that has struggled with business collapses and soaring costs.
It comes as industry insiders have revealed the city has just had its biggest run of land sales in three years and is only months away from ditching rebate packages that have been saving new homebuyers as much as $30,000.
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The New Gardens Estate, Thornhill Park, had been slated for 910 homes to be built when it launched several years ago, but stalled and was eventually sold off in 2023 — after the operators had sold about 150 blocks of land.
A consortium of buyers including NBEyeland, Punvec Group and Batra Group bought it out under the banner of their project developer LandxWise.
Co-founder and director AJ Batra said they had almost immediately begun hearing from the projects buyers, hoping their purchase would be honoured.
An artists impression of the Thornhill Gardens estate in Thornhill Park.
“We bought the asset under stress after the project had stalled,” Mr Batra said.
“As soon as they saw us buy it, a number of the buyers were asking us if they could please keep their contracts.
“From our perspective, we wanted to honour those rather than enforce a clause in the contract to let us resell them – some of them had been sitting there since 2019.”
He estimated that the decision would cost them about $80,000-$140,000 per contract, with the cost of preparing land and infrastructure having risen by several hundred dollars a square metre since the contracts were signed — and many of them for 400sq m allotments, considered on the larger side today.
“But residents will be living there in the next three months, with 20 homes under construction at the moment,” he said.
Some of those buyers are among those who have been waiting five years for their home dream.
The decision has sparked surprise from development industry insiders, who have lauded it as the kind of action needed to rebuild homebuyers confidence in the construction sector where a staggering 3491 businesses were placed in administration during the past financial year — almost a quarter of all businesses that became insolvent across the nation.
Marketing images used by B&S Land when the estate was being sold by its prior developer.
Urban Development Institute of Australia Victorian president Tom Trevaskis said while it wasn’t unheard of for a developer to honour prior contracts when taking over a new site, one doing so in the current climate was important for boosting buyer confidence.
“I think Victoria has an issue around confidence, even though the market fundamentals are relatively robust,” Mr Trevaskis said.
He added that developers working to boost confidence in the sector was in their best interest.
“Purchasing a home is the biggest financial decision families and investors will make, and they rely on what their family and friends tell them,” Mr Trevaskis said.
“Particularly if it’s a house they will choose to live in — they will want to live near family and friends; they will ask them about how their experience was with the developer and the builder, and they will make a decision based on that feedback.
“So developers and builders taking a long-term view is critically important.”
While interest rate cuts earlier in the year had been helping to build on homebuyer confidence, he said developers also had a role to play.
Urban Development Institute of Australia Victorian president Tom Trevaskis, said developers have a role to play in helping to boost homebuyer confidence.
“Clearly developers who are doing the right thing by the customers will help with the confidence across the broader sector,” he said.
“And the sentiment is on the improve.”
Oliver Hume data released this week shows Melbourne land sales topped 1000 in June, the first time that has occurred in a single month since 2022.
It follows inquiry volume spikes in January and March, reflecting anticipation of interest rate cuts — however this was not reflected in June, as while sales numbers rose inquiries dipped.
Oliver Hume project marketing chief executive Julian Coppini said with the reserve bank holding rates this week, it was unlikely the strong run of sales in June would be repeated in July.
However, Mr Coppini said developers taking a “long-term view” was a good thing for themselves as well as buyers, and that now “is the time to do something like that” — referring to LandxWise’s decision to build confidence at a cost to their own margins.
Oliver Hume’s Julian Coppini said homebuyers might have just a few months left to cash in on developer rebates of as much as $30,000 before confidence removes the need for them.
He added that he expected end of calendar year sales to be close to 9000, after coming in below 7000 in 2024, and for interest rate cuts to help drive up established housing prices which would help make new home builds more appealing — despite the Reserve Bank deciding to leave rates on hold this week.
While many developers had turned to rebates in a bid to boost sales in the past few years, Mr Coppini said he now believed these would be all but gone by the end of 2025.
Mr Batra said while it would not be feasible for all developers to take similar actions if acquiring stalled projects, but that “confidence in developers is paramount right now”.
And that those who could do so, would likely benefit — with word of mouth from their inherited customers helping to double the number of pre-sales they have now collected.
“Our view was that they had trusted this project and we didn’t want to break that trust,” he said.
“We could have walked away, but we would have left 150 buyers high and dry, and that wasn’t the way we wanted to go about it.
“A lot of them were 100 per cent worried that they would be losing their home dream. A lot of the people already committed were family buyers.”
Sales images used when the land was put up for sale show the project is split across two components.
The developer said he believed a few others in the industry would have taken the same view, and that those who had been around a long time saw the value in this approach.
“And there’s a few other developers that would share in our train of thought, and some that don’t. But the ones who have been around long enough see the value in doing these things.”
The developer expects to make back some of the upfront hit by increased medium density aspects after revising plans for the site, but anticipates having more than half the project sold and land being prepared for construction by this time next year.
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