February’s rate rise landed into a recovering market

February’s rate rise was the first in over a year, and it landed into a market that had spent 2025 quietly rebuilding its confidence. Three rate cuts through 2025, combined with wage growth that outpaced inflation for most of the year, restored purchasing power and brought buyers back. Gross lot sales across metropolitan and regional growth areas finished Q4 up 59% on the same period in 2024.

Supply rose and time on market tightened

New lot supply in Melbourne rose 65% annually to 2,444 lots in Q4. Melbourne’s median lot price held just below $400,000 for the sixth consecutive quarter, and average time on market tightened to 140 days, the shortest in two years.

Buyers had already begun pricing in rate rises

By the end of 2025, the market had earned some optimism. Many assumed this optimism would have been trimmed by the February rate rise, but Daniel Gradwell of ANZ notes that auction clearance rates and price indicators began easing as early as November, when the rate rise commentary intensified. Households had already begun pricing in where rates were headed.

First home buyers feel the pressure most

Though a single rate rise does not undo a recovery, it does change the calculations for first home buyers already operating at the edge of affordability. Constrained buyer affordability is also focusing viable development opportunities into smaller sites, which is where builder-developers have built their edge.

Builder-developers are a force the market has been slow to price in

Over recent years, builder-developers* have emerged as serious competitors for greenfield development sites, and the market has been slow to price that in. One of our recent campaigns for a 66-lot permit-approved site in Epping drew the two strongest bids from interstate builder-developers. This group has grown significantly in capital access, strategic intent, and breadth. It’s also important to note that this group is increasingly well suited to the smaller, fragmented parcels that Victoria’s tightening pipeline is releasing.

*Builder-developer refers to a company which acts as both the developer and builder.

This article references findings from our Q4 2025 Victorian Greenfield Market Update.