From the Desk – October 2025

For the first time for some while Victoria is showing some positiveness in the real estate arena. In September 2025, Victorian home prices rose by .5%, driven by a combination of lower interest rates, increased buyer competition, and a growing population. The REIV reported a 2.7% increase for the September quarter for the median house price in Melbourne to $954,500, and a 2.5% rise in regional Victoria. Strong growth was also seen in the new home market, with a significant jump in sales following policy changes. I am always concerned with the outcome of first home buyers incentives and there has been a few. In most cases the initiative has the buyers scrambling to take advantage of the government offering, in this case a 5% deposit with no mortgage insurance penalty, which in turn causes a wave of excitement by first home buyers and investors competing for similar properties-resulting in inflated prices.

Westpac is forecasting one more interest rate cut before the end of 2025. This will take the cash rate down to 3.35%. After which, it is predicting another rate cut to 3.10% by March 2026. One of the few triggers which will influence an interest rate cut by the Reserve Bank next month is the fact unemployment has risen and hit its highest level in four years. Not a huge increase for last month at .2% but worthy of monitoring nonetheless and has the boards full attention. I feel at this point it is 50/50 if the Reserve Bank will act favorably on mortgage holders. Given Christmas is around the corner and the current hardship for many to make ends meet, it would be fitting to round off 2025 with a rate reduction, but I feel the cash rate may remain firm for next month.

Auction results have been impressive so far this month, given the additional numbers since the AFL Grand Final. If they exceed 800 per week and the clearance rate holds steady at 70-80%, which it has, it is a very positive sign. Currently achieving an average of 84% with one Saturday remaining, (normally one of the biggest auction days of the year).

Melbourne’s relative affordability compared to Sydney makes it an attractive market, especially with strong underlying conditions. It is now the second most affordable capital city to Hobart in Australia. One of the most promising signs for long-term capital growth regionally is Geelong’s population forecast. Over the next 15 years, it is expected to grow by 63%, pushing demand for housing, infrastructure, and services. In the 12 months to June 2024, the population of Victoria grew by approximately 184,000, largely due to a surge in overseas migration with a net increase of 154,256. Greater migration can be a win for the economy with additional skill sets always rejoiced but as I have mentioned it needs to be monitored so that the roads, schools, hospitals, prisons and medical procedure waiting times are not continually exhausted.

Michael Ramsay

Principal

The Advocates

Land Tax

Almost 12 months ago on January 1, 2024, the land tax threshold was reduced from $300,000 to $50,000. An extraordinary financial burden amidst a time of a cost-of-living crisis reflecting selfishness, heartlessness. I am echoing sentiments I have made previously but as time goes on, I witness the grief of young families having to sell their investment and or holiday properties through no fault of their own. The 500% increase is naturally to assist the government claw back its debt due to mismanagement throughout and beyond the covid period. The additional tax will stay in play until at least 2033 but realistically will never leave us. It is hard to fathom how we the taxpayer who have already forfeited substantial income tax, (48% for most who have a second property) and have saved half their life to afford a getaway or investment property, inclusive of the highest stamp duty in Australia, now endure a tax that is the last straw for most.

Not too many states in the in the world pay nearly half their income in tax, together with an average of $55,000 in stamp duty for the privilege of buying a home, and an average of a further stamp duty payment of $40,000 when buying a second property plus upwards of $5,000 a year in land tax. All whilst posting a debt of $150 billion.

One sound investment solution to this problem is to consider the purchase of a commercial property where the value of the land content is modest and the property has a minimum net yield of 6% with rent increases annually aligned with CPI, in turn increasing the value of the property. Alternatively buy a unit in a cluster where the land value in nominal but rent-ability is sound and capital appreciation is constant.

Victorian Statistics

MEDIAN HOUSE PRICE MELBOURNE	$954,500
MEDIAN UNIT PRICE MELBOURNE	$628,000
MEDIAN PRICE REGIONAL VICTORIA	$637,000
MEDIAN UNIT PRICE REGIONAL VICTORIA	$419,000
AUCTION CLEARANCE RATE	82%
CASH RATE	3.6%
INFLATION RATE	2.1%
RENTAL VACANCY RATE	1.8%

From the team at The Advocates

P.S.

We welcome input to our newsletters so please contact us with any experiences you’d like to share – positive or otherwise! Disclaimer: the information contained in this newsletter is based on personal opinion and experience, it should not be considered professional financial investment advice. Statistics are sourced from the REIV and RP Data