Upbeat Developers Predict Return to Growth

Australia’s property landscape is poised for a significant shift as industry leaders forecast a series of interest rate cuts will unlock pent-up market potential and spark renewed growth this year. And as Brisbane and Adelaide prepare to join the million-dollar median house price club, Victoria’s sustained under-performance has created what developers say is a rare window of opportunity for the market that traditionally leads national growth trends. It comes as the national market demonstrates what Domain chief of research and economics Dr Nicola Powell described as “remarkable resilience amid economic uncertainty”. While house price growth in capital cities are projected to grow 5 to 7 per cent in 2025, Victoria is expected to present a notably different picture. Domain’s data indicates regional Victoria could experience a decline of 3 to 5 per cent in house prices, while Melbourne’s growth is forecast at a modest 3 to 5 per cent for houses, and unit prices potentially stagnating at 0 per cent to -2 per cent. This disparity in Victoria’s performance has created what industry experts have labelled a unique market opportunity. Resimax chief executive Ozzie Kheir told The Urban Developer “Victoria has experienced the most standard market over the last two to three years, and there’s been very little growth rates”. The shift in national property values has created unexpected market conditions, with Kheir noting that “Adelaide has now either equal or higher house prices compared to Melbourne”. “You wouldn’t have thought that could be the case four or five years ago,” Kheir said. “Housing stock is undervalued in Victoria by at least 15 to 20 per cent, which must come back. In my view, smart investors will soon see this as an opportunity.” ▲ Ozzie Kheir: smart investors will soon see Victoria as an opportunity. The market is expected to benefit from monetary policy changes, Kheir said, predicting that “interest rate cuts are inevitable”. “And the longer the delay, the larger they’ll be in a shorter timeframe. I believe we’ll see two to three rate cuts in 2025,” Khier said. Coff Property Group director Adam Coff agrees: “I think we’ll see the RBA drop rates around the second quarter, which should rekindle the market, bring more buyers back into the mix and fuel more interest in the build-to-sell sector.” Supply constraints have emerged as a critical concern for the sector, according to Kheir. “After every boom there has been residual stock, and Victoria is currently in this position,” he said. “We’re going to be in a situation where the market does rebound, and residual stock will be snapped up quickly. We will then be in a position where we can’t replace the stock, because there has been a lack of new approvals. “We’re already seeing limited stock in certain areas of Victoria, and this shortage will only continue to intensify. As supply dwindles, demand pressures will push housing prices higher.” Developers are adapting their strategies to meet evolving market demands. Lowe Living, for example, said it was preparing to launch its largest volume of product to date, with a focus on the owner-occupier market. ▲ Lowe Living’s Emerald Place, South Melbourne. “For us, it’s less about volume but a stronger focus on how we can contribute to bringing better stock to market, responding to where we know the needs of owner-occupier buyers will be,” Lowe Living co-founder Tim Lowe says. “Buyers are more educated and astute, so developers need to navigate these conversations promptly and confidently, more than ever before.” Looking to 2025, Lowe said “there will continue to be more reliance on capable developers and their ability to manage costs and mitigate risk in a challenging environment”. Consumer preferences also continue to evolve, with Domain reporting that searches for properties with pools and waterfront locations topped national search rankings, while home office space has declined in priority. Kheir said a shift in development trends, with “families adjusting, prioritising space inside over large backyards, and benefiting from nearby open community spaces”. Gravias Property Group managing director Aaron Gravias predicts that in 2025, consumers will remain cautious and conscious of costs. “Interest rates, property taxes, cost of living, and low levels of disposable income will be central to shaping the demand for both residential and commercial real estate,” Gravias told The Urban Developer . Despite challenging market conditions in 2024, Salvo managing partner James Maitland told The Urban Developer they had “sold over 300 apartments” and “a $6-million penthouse this year, which highlights that there is still strong demand at the higher end of the market provided you get your product right”. ▲ A render of Salvo’s Moray House, designed by Rothelowman Architecture. Ledlin director Oscar Ledlin told The Urban Developer he expects to see a lot more demand for the luxury small-format retail product, although he cautions that “further growth in property taxes, particularly in Victoria, and easing rental demand should put downward pressure on industrial land values”. Integrated property service provider The Move recorded approximately 290 Melbourne apartment sales, while Gravias Property Group completed projects totalling $20 million in gross realised value. The Move co-founder Jon Ellis told The Urban Developer “we saw good levels of investor interest in Melbourne this year and I think next year will be even stronger. Melbourne is undervalued, investors know this, but they will be chasing yield as holding costs are not likely to come back dramatically next year”. The property market’s resurgence will hinge on renewed optimism, according to Kheir. “We’re in a tough spot right now with high mortgage rates, record debt levels and rising costs. It feels like everything is just going up, and people are feeling down,” Kheir said. “What we need are a few positive things to happen—some wins that can lift people’s spirits. “The property market thrives on optimism. People need to see a clear path forward, where supply issues are resolved, affordability improves, and stability is restored. Only then can we build a sustainable market.”

Upbeat Developers Predict Return to Growth

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