Affordability and opportunities ahead for Victorian property market

WITH DANIEL WALSH AND LEIGH DELEDIO FROM UFINANCIAL

Housing affordability has been the driving force for property buyers throughout 2024.

Rising interest rates have tightened borrowing capacity, influencing how buyers approach the market.

High interest rates and stricter lending conditions have shaped these behaviours, particularly in Victoria, where affordability continues to be a critical factor.

Across the board, affordability challenges, rising construction costs, and an increase in both investors and first home buyers have shifted demand towards more affordable market segments.

While debt servicing ratios reached record highs, population growth and a limited housing supply helped support property prices.

The market in Victoria, especially in regional areas, has shown mixed results. Melbourne experienced a slight decline in property values this year, largely due to affordability constraints, increased property listings, and changes in policy affecting buyer sentiment. In contrast, regional Victoria has remained relatively resilient, with areas such as Geelong and Ballarat benefiting from strong demand and more competitive price points.

These areas continue to attract buyers seeking value and lifestyle opportunities outside of the city.

Stock levels have played a significant role in the market’s movements.

Melbourne’s property listings rose above the five-year average, giving buyers more choice and reducing the urgency to make quick decisions.

Meanwhile, in regional Victoria, inventory levels remain tighter, supporting prices and creating favourable conditions for sellers.

Looking ahead, a potential interest rate cut in 2025 could boost buyer confidence and increase demand. While price growth may slow, the ongoing imbalance between supply and demand will likely create opportunities, particularly for those willing to explore regional markets.

Staying on top of local trends will be key for buyers and investors looking to identify promising areas.

While rates have remained unchanged, many banks have started reducing their interest rates, making it a great time for homeowners to consider refinancing.

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