October 2025
Cameron Kusher
Thanks for reading my new monthly column published by the REIV.
This column is designed to give you the inside information on what the latest data shows and what you need to know for your discussions with buyers and vendors.
Here are the top five things to talk with your vendors about:
The Home Guarantee Scheme
By all reports, the Home Guarantee Scheme has started with a bang. The Scheme allows first home buyers to purchase, as long as they have a 5% deposit and are buying under $950,000 in Melbourne and Geelong and under $650,000 in regional Victoria without having to pay lenders mortgage insurance (LMI).
With the Scheme having now commenced and your vendor has a property coming to the market under the price cap, they should expect stronger interest which may lead to a better sale price but it is still important to be realistic on price expectations, especially when determining the advertising price.
Interest rates
The RBA decided unanimously to keep the cash rate on-hold at their meeting in late September. The RBA flagged that although inflation has slowed, September quarter inflation may be stronger than they had forecast.
At the same time, private investment, private consumption (spending) and overall economic growth has been stronger than forecast.
After three 25 basis point cuts to official interest rates so far this year, the prospect of another rate cut this year has diminished.
Unless economic growth slows, inflation is weaker than forecast or there is a meaningful lift in unemployment, it may be the case that there are no further interest rate cuts in this cycle.
At the time of writing, cash rate futures pricing didn’t have another 25-basis point cut anticipated until May of next year with no further cuts thereafter.
Whatever does end up happening, it seems likely this interest rate cutting cycle will be shallower than anticipated even just a few months ago.
This will mean that borrowers won’t receive as much of a boost to their borrowing capacity and for those with a mortgage there will be less interest rate relief.
Housing credit growth is accelerating
Housing credit growth is accelerating which reflects the fact that buyers in the market are becoming more active however, it also increases the likelihood that the banking regulator (APRA) may introduce measures to ensure credit quality is maintained.
Over the 12 months to August 2025, housing credit has increased by 6.1% which is its fastest annual rate of growth since December 2022.
While both owner-occupier and investor credit growth is accelerating, the 6.9% annual growth in investor credit is its fastest annual growth since December 2015. Investor credit is also growing faster than the 5.7% growth in owner-occupier credit.
The acceleration in credit growth reflects the increase in demand for housing. While demand from investors has languished over recent years in Victoria, we also know the state is back on the radar of investors because of its relative housing affordability and improved rental yields.
When trying to sell your property, as long as it is appropriate for the property, it may be worth focusing on the investment opportunity.
Housing prices
The latest REIV September 2025 quarter median prices found that Melbourne house prices were 2.7% higher over the quarter reaching $954,500 and the median unit and apartment price was 2.1% higher reaching $645,500.
Regional Victoria median house prices were 2.5% higher over the quarter and unit and apartment prices were 1.4% higher, reaching $636,500 and $434,000 respectively.
It seems that after a few years where prices were flat or falling, the lower interest rates, relative affordability and improving sentiment are starting to push prices higher throughout the state.
The quartile data reveals that in Melbourne, it is the lower priced properties that are driving the growth in values. In regional Victoria it is the reverse with higher priced properties driving the growth.
Keep in mind that the upper quartile price in regional Victoria is still lower than the median price in Melbourne.
I expect that prices will continue to rise from here and potentially accelerate as demand for housing continues to increase. In Melbourne in particular, I expect more affordable housing will continue to outperform due to more investors becoming active in the market and first home buyer incentives attracting more buyers at lower price points.
Given this, prices in the new year are expected to be higher and overall stock levels will likely be lower.
Housing supply
The latest SQM Research data found that in Melbourne, there were 17,886 new listings in September 2025. This highlights tight supply despite spring having commenced with new listings 0.3% lower over the month, although they were 5.0% higher than in September 2024.
The total number of properties listed for sale was 37,867 in September 2025. The increase in demand is leading to a fall in total listings which were 4.7% lower over the month and 5.9% lower over the year.
Total listings in Melbourne are trending lower and have been right throughout 2025.
Although some areas of the state continue to see elevated listing volumes, they are typically trending lower and unless there is a significant uplift in new listings this is expected to continue.
Lower overall stock at a time when demand is increasing provides vendors with better selling conditions, more buyers chasing fewer properties. These are the type of conditions where you get a superior sale price.
It’s important to understand current demand and supply dynamics at the local market level and that can dictate vendor price expectations and help determine the ideal time to bring a property to the market.
Here are the top five things to talk with your buyers about.
Price growth is lifting
With interest rates having fallen so far this year and stimulus for first home buyers going live we’re seeing an increase in housing prices, for the first time in some time, across the state.
This is translating into more people at open homes and more bidders at auction and overall, a more competitive process in which vendors price expectations are increasing.
Given this, it’s extremely important to have your finances in place and be willing to make competitive offers for those properties you are interested in.
It’s likely that the longer you wait in this market the more you’ll end up paying to secure a property.
A stronger economy and contained inflation mean interest rate cuts are less likely
If you are awaiting lower interest rates and the subsequent improvement in borrowing capacity to purchase you may miss your opportunity to buy.
Lower interest rates mean that you can borrow more but current expectations are that there won’t be another interest rate cut until May next year and that will be the final cut of this cycle.
Things can change of course but if you are waiting for the next rate cut to buy, any potential uplift in borrowing capacity from that cut is likely to be cancelled out by the strong demand pushing prices higher whilst you are awaiting that cut.
Also, it is important that you don’t over-spend, remember that interest rates will fluctuate over the period of your mortgage so always keep a buffer for fluctuations in when you are purchasing.
First home buyers and investors are more active in the market
Relative to other states, Victoria has had higher levels of first home buyer borrowing and relatively fewer investors over recent years.
Because of its relative affordability, due to weaker price growth of late, Victorian property is increasingly popular with investors. At the same time, federal government incentives for first home buyers which have just commenced are driving an even higher level of demand from them.
If you are looking to purchase a home which falls beneath the Home Guarantee price cap you are likely to see heightened first home buyer competition. You may find that investors are competing to purchase these properties too.
Do not be surprised if this increased competition for this stock leads to higher than anticipated selling prices in some instances.
This government stimulus for first home buyers is new, but it also has the potential to push prices higher relatively quickly. Recent sales comparisons are important, but the level of demand is also a big influence on the ultimate selling prices.
Properties are selling quicker, and this trend is expected to continue
Throughout the state, days on market in September 2025 was 40 days, down from 48 days a year earlier.
This is split between 36 days, down from 42 days a year ago in Melbourne and 54 days, down from 65 days a year ago.
With property prices rising and demand increasing I expect that days on market will continue to fall over the coming months.
Interestingly, throughout Melbourne the outer more affordable areas have the shortest days on market and inner areas have the longest (note these don’t include auction sales).
If you are looking to buy a property that isn’t going to auction, properties are selling quicker so it is imperative to get a competitive offer in quickly in order to give yourself the best chance to purchase.
New listing volumes are low and total listing volumes are moderating as more buyers appear
Competition for housing stock is heating up and this is highlighted by the latest listing data from SQM Research. The data found that relative to last year new listing volumes were 5.0% higher in September however, total listings were 5.9% lower.
While there is more stock coming to the market affording would-be buyers more choice, overall stock levels are trending lower which speaks to the increasing demand for housing.
This highlights the importance of getting a strong offer in front of vendors as early as possible if you are a motivated buyer. The longer you wait, the more competition you’re likely to see for that property.
About Cameron Kusher
Over the last 20 years Cameron has worked as a property researcher for major businesses such as PRDnationwide, CoreLogic (now Cotality) and REA Group.
Cameron spent 12 years at CoreLogic as the Head of Research for Australia and 5.5 years at REA Group as the Director of Economic Research. Over the past 17 years he has become a well-regarded thought-leader on the residential property market and delivered thousands of presentations to the industry, customers and consumers.
He is passionate about taking complex economic and property insights and making them easy for anyone to understand, free of the jargon that most economic and property presentations tend to contain.