The Revival of Victoria’s Property Market: An Analysis of Current Trends
The Victorian property market appears to be emerging from a prolonged period of stagnation, with analysts suggesting that it has finally hit its lowest point. The recent interest rate cut of 0.25% in February, while seemingly minor in terms of immediate financial relief for Australians, has played a critical role in restoring confidence among potential buyers and investors. It signals that the worst might be over, encouraging many to consider entering the market once again.
Early indicators for 2025 paint a positive picture. Land sales are experiencing a notable uptick, and interest in new home construction is reportedly at its highest since the COVID-19 pandemic. This resurgence creates a unique opportunity for first-time homebuyers, as they can expect a window of three to six months during which motivated landowners and builders are eager to negotiate deals potentially saving them substantial amounts—up to $40,000 in rebates and discounts.
However, industry experts caution that this opportunity could be fleeting for a number of reasons. One major factor is the anticipated depletion of registered land ready for construction. As land sales rise and demand increases, builders and developers are expected to retract buyer incentives. The current rebates that make land acquisition financially appealing are likely to disappear as developers restore their profit margins, which would result in a shift where buyers once again must compete for land releases or wait for new lots to become available, potentially delaying construction timelines by 12 to 18 months.
In addition to dwindling land availability, the competitive landscape among builders is set to change as well. At present, many builders are competing aggressively, with some willing to build at cost in order to maintain cash flow and workforce levels in anticipation of a housing boom. As demand continues to rise, builders will likely start to increase their prices or reduce promotional offers as they seek to recover lost profits from previous years when many struggled financially. Compounding this issue is the projected increase in land title wait times, which limits immediate revenue for builders and necessitates proactive price planning to account for fluctuating supply and trade costs—referred to in the industry as a Cost Movement Allowance (CMA).
As a result of these trends, property prices for both raw land and newly constructed homes are expected to rise significantly by mid to late 2025 and into 2026. Increased demand from the industry will stimulate higher costs across the board, and given the persistent shortage of qualified tradespeople, the eventual cost increases will inevitably transfer to consumers. Prospective homebuyers can expect to see higher contract prices as market dynamics evolve.
Moreover, the rising rental demand in Victoria is likely to lure investors back to the state, making it an attractive investment destination. With rental yields climbing, coupled with relatively lower costs compared to other Australian states, it’s a favorable time for investors. As housing prices in Queensland, New South Wales, and South Australia soar above $750,000, opportunities remain in regions like Geelong—specifically in areas like Charlemont where it’s still feasible to find a three-bedroom house and land package under $600,000.
In summary, while the Victorian housing market shows promising signs of recovery, the window of opportunity for buyers and builders may close swiftly as land supply diminishes and building incentives wane. Investors and prospective homeowners alike should remain vigilant in navigating this evolving landscape, aware that the current conditions might not last long. The interplay of rising costs, limited available land, and robust rental demand suggests that those looking to enter the market should act decisively before the anticipated shifts materialize.
