The Melbourne and Geelong greenfield markets are showing encouraging signs of recovery, with June marking the second consecutive month where lot sales exceeded 1,100 across 249 active estates. Total sales reached 1,146 – a continuation of the positive trend that began in late 2024.

“It’s been a slow financial year overall, finishing at just 9,800 lot sales,” said Michael Staedler, General Manager of Research, Data & Insights.  “But the two rate cuts in February and May have definitely supported first home buyer confidence and overall market sentiment. That has laid a stronger foundation for the financial year ahead.”

Stock overhang and buyer confidence

Despite the uptick in sales, the market continues to grapple with elevated cancellation rates. In June, 313 lots returned to market. However, this didn’t increase the stock surplus; in fact, the overhang slightly improved, decreasing from 6,200 to 6,100.

“What’s interesting is that, even with cancellations, we’re starting to chew through stock,” noted Jonathon Driessen, General Manager of Communities. “That signals some resilience in buyer demand. Though 300 returns a month still suggests pockets of uncertainty around settlements.”

Michael added that some of the elevated cancellations stemmed from projects reaching their sunset clauses, rather than buyer withdrawals. “They weren’t’ necessarily fallout due to affordability. Still, we expect elevated cancellations to persist through 2025, though another rate cut or two could stabilise things.”

Redefining a ‘normal’ market

The current sales volume is approaching what can be considered the ‘new normal’. Over the past decade, the long-term average has shifted to around 1,300 lot sales per month – down from the previous benchmark of 1,500. “It feels strange to say, but we’re only about 200 sales short of what we would now define as a normal market,” Johnathon said. “That’s a big change after the years we’ve had.”

While ongoing volatility is expected, the gradual increase in sales since December and a 19% year on year uplift in total lot sales signal a more stable trajectory. “If we keep trending up, we could see between 13,000 and 15,000 lot sales in FY26 – that’s a 30-40% increase on the year just passed,” added Michael.

Pricing holds steady, rebates declining

Median lot prices remain firm, and developers are beginning to pull back on rebates, particularly after the modest lift in established home values, which is up 3% in Q1 and 1.5% into Q2. “There’s a shift happening. We never got the price correction we anticipated, with improving sentiment and rate cuts, rebates are starting to shrink,” Johnathon observed. “It’s a concern though, especially with so many buyers capped at $750,000.”

Michael agreed, highlighting the affordability squeeze; “The land market needs to fill that affordability gap with more compact product, townhouses, and clever construction strategies, especially with established prices pushing towards the $1 million mark.”

Interest rate outlook and sales forecast

Looking ahead, all eyes will be on the RBA’s next meeting on 12 August.

“If CPI drops to 2.5% in July, the RBA is likely to cut,” Michael said. “That would help boost market confidence again.”

Listen to the full June 2025 Monthly Recap here.