Episode 5: Victorian Property Market: Is 2025 the comeback year?
It’s no secret that Melbourne’s property market has faced its share of headwinds – but are we now seeing the first signs of recovery? In this episode of Navigating Property with Ben Plohl, Ben is joined by BFP Property Group’s Victorian buyer’s agent, Damian Fletcher. Damian brings deep local knowledge of Melbourne and Geelong, with insights sharpened by years of on-the-ground experience.
Together, Ben and Damian explore why the fundamentals of Victoria’s key markets remain strong – from population growth to job creation and major transport projects – and how savvy investors are positioning themselves ahead of the curve. They also discuss land tax, rental reforms and other legislation that’s shifting the landscape, and how to navigate these changes when buying strategically.
If you’ve been thinking about working with a specialist buyer’s agent Melbourne or are curious about off-market properties in Melbourne, this episode offers timely advice on what to consider, where to look and why now might be a smart time to act.
Darcy Milne
Welcome to navigating property with Ben plohl, the podcast that helps you understand the property market, make smarter investments and navigate your way to success. Join your host, Ben plohl, founder of BFP Property Group, as he breaks down real estate trends, interviews experts and shares insights to empower your property journey.
Speaker 1
Hello, coming up on this episode, we are going to chat about the Victorian property market in particular, greater Melbourne and Geelong, and it’s one of those topics that is on the mind of a lot of investors at the moment. It’s a market that has struggled since COVID however, are we starting to see green shoots in the data, and are we starting to see some positivity on the ground? Here we go. Melbourne has been constrained by several factors that are transitory in nature, but the long term fundamentals of the Melbourne and Geelong market remain very strong, with a robust economy, strong population growth tipped to overtake that of Sydney and a large infrastructure pipeline making it one of the most livable cities in the world. Of course, we need to tread carefully with LGA and suburb selection being a very, very important and crucial joining me on today’s podcast is Victorian buyers agent in my team, Damian Fletcher. Damien calls Geelong home and has lived in the region his entire life. Damian provides our clients with local Intel expertise and on the ground analysis when acquiring high performing strategic investment properties for our clients. Welcome Damien, Thanks Ben. Thanks for having on Victorian market, or in particular, Melbourne and Geelong, it’s a market that we’re starting to see, I think, a lot of interest or questions being asked amongst our client base. It’s a great time to be creating some some information and content for for our listeners. So I think this one’s going to be really popular and an eye opener for for a lot of people. So I guess the first thing that I wanted to chat about is just sort of highlighting the performance of the Melbourne or Geelong market since COVID. Have you got some data on what we’ve actually seen since COVID, which is what four or five years now? Yeah,
Speaker 2
absolutely. Thanks, Matt. Yeah. Look, it’s been sluggish. And when you’re looking at some of those other capitals, it’s well down. But Melbourne we’ve seen has risen about 13% since the onset of COVID, or certainly here in Australia, around 2020 so the median dwelling value is in around 779,000 now about six or 7% below the peaks of early to mid 2022, we’re still below, behind the peak. Yeah, most certainly, yeah. And Geelong is similar as well. It’s in that low 700 median house value 720,000 and it’s grown just over 20% but there has been a claw back since its peak around early to mid 2022 as well.
Speaker 1
Right? So do you think it’s fair to say we’ve seen the bottom of the Melbourne or Geelong market, or is it too soon to say
Speaker 2
I don’t have a crystal ball, but you’re looking and reading the data every single day, and the data is suggesting that there’s green shoots starting to appear, and we’re seeing subtle growth in some pockets in both Melbourne and Geelong. So suspect to see more of this, given what the data is indicating. Yeah,
Speaker 1
absolutely. I think again, yeah, no, crystal ball here, and we’re not in the business of getting that crystal ball out. I think you know, from what I see, in terms of the data, speaking to a lot of you know, other property professionals, there’s a good chance that we have seen the bottom of that market. I think it’s all about treading carefully. If we haven’t seen the bottom, we’re pretty close. I’d say that’s great. Thank you. So the philosophy around buying into markets when they have not performed well, but fundamental support growth, that’s something that I’ve been taught when I started property investing, and I’ve been doing this for 20 odd years personally, and now seven odd years as a buyer’s agent, and it’s the old concept of buying gloom and selling boom. Warren Buffett is pretty famous for being fearful when others are greedy and greedy when others are fearful. I think those phrases are quite relevant. Now. What are your thoughts? I’d much rather buy into a market that has some pretty solid fundamentals but hasn’t seen extensive growth, provided you understand the reasons for that, rather than buying into a market that perhaps is over inflated, be it Perth or other markets across the country. What are your thoughts around that? I couldn’t agree more. I think you touched on there the fundamentals and Melbourne, to a lesser extent, Geelong, but certainly being one of the biggest regional hubs in Australia. But Melbourne and Geelong have got significant fundamentals that undermine its economy. You know, you’ve got some great economic job opportunities. You’ve got tourism, all these things that are crucial to the Victorian real estate market. And I agree. I mean, would I want to be getting at the top or near to the top in another market? No, I don’t think I would. I see significant upside in the Victorian real estate market, and in particular, 100% Melbourne and Geelong, I couldn’t agree more. I think when I’m speaking to clients, it’s all about, if we’re talking about Melbourne, it’s about, well, there’s a lot more upward potential than downward risk, as opposed. You’re looking at certain parts of WA or certain parts of maybe even Queensland, where you see it has grown exponentially over a short period of time, been a number of years. I think the downward risk is definitely there, as opposed to that sort of upward potential. So I think those sort of concepts are pretty relevant to the Melbourne market now. So if we go through maybe five of the key fundamentals that support or will support growth moving forward for the Melbourne, say, Geelong market, I guess the first one forecasted population growth, which is quite exciting. I think Melbourne’s earmarked to overshoot the Sydney population levels, which is quite interesting. So again, I’m not sure when that’s supposedly going to come into effect with its 1015, years, but before we know it, Melbourne is going to be a bigger city in terms of population in Sydney. Yeah,
Speaker 2
that’s exactly right. I read some statistics there on internal immigration or migration, and also external migration to Victoria, and it was something like 180,000 people in the last 12 months. And to your point there as well. Yeah, the federal government have suggested or run reports or studies that indicate Victoria, or Melbourne in particular, could overtake Sydney as the highest population capital city
Speaker 1
around they’re not moving down there for the weather. What are they moving for? To the coffee. Wow,
Speaker 2
that’s right. Look, I’m gonna say the mighty AFL football. But some great coffee, some great tourism things as well. So and great events too. You know, we pride ourselves on, on our events here in Victoria.
Speaker 1
Yeah, awesome. I think the next one transport infrastructure. So, yeah, similar to Sydney, I’m based up here in Sydney, and there’s been some phenomenal transport infrastructure, which has completely changed the fabric of this city down in Melbourne. What’s sort of going on from a from an infrastructure perspective, and the reason why we highlight that is infrastructure is a big thing that we like to see in a market when it comes to, you know, should we invest or shouldn’t we invest? Because infrastructure creates jobs, it allows the population to freely move around, and really opens up different corridors in a city. But what are we actually seeing in Melbourne in terms of transport infrastructure,
Speaker 2
yeah, spot on. And that’s been a massive thing that the state government here over the last decade have really put a focus on. So things like the West Gate tunnel, so connecting the west to the city has been massive, because that Princess freeway on your your morning travels to the city can be a bit of a nightmare to increase that flow and to improve that so they’re spending a lot of money there. You’ve got the Metro the second metro tunnel for the Metro railway system, which is about to open up, which again, just helps connectivity around the city, whilst also other projects, like the suburban rail loop as well. One of the big things, though, which is almost concluding, has been the railway level crossing removal. It’s been a big thing. Over the last 10 years, the labor state government have spent a lot of money on that, but it’s, it’s been incredible that sets up, you know, the Next Generation and beyond, in terms of traffic management and things, money well spent. Look, as you said, creates jobs, improves connectivity and makes it easy to get around. And these things are going to stand the test of time. They’re going to be there for our kids and grandkids and
Speaker 1
generations? Yeah, absolutely, yeah. On the jobs front, what are we seeing from a jobs creation perspective? Obviously, this infrastructure will create plenty of jobs, which will mean more money in per household, which, which will, then, you know, spur on capital growth, likely, but, but on the jobs front, what are we We’re seeing? I know the the unemployment rate’s pretty, pretty stable in Melbourne, anything in particular to point to around
Speaker 2
jobs? Oh, look, the public sector employs heavily in Victoria. That being said, you know, education as well as a massive thing, some of the best universities in Australia, and probably even some of the great universities contending globally, as well, with Melbourne Uni and Monash uni and those things. But health as well. Health is a massive thing here in Victoria, and we’ve got some great hospitals, a lot of employment in those areas, and jobs creation over the last few years has been steady, and it’s been good, yeah, and
Speaker 1
you touch on your universities and things, but one thing that I only come across recently, most expensive private school in this country, or if not one of the top two or three, is Geelong Graber King Charles.
Speaker 2
Went there in year 10, I think it was, Oh, look. And it’s an incredible school. Being local down this way in Geelong, there’s been some really famous names there that have gone through that school, and it’s been somewhat of a footy factory and cricket factory as well, for some churning out some great sportsmen and women. I think
Speaker 1
one thing that will really push along the Melbourne Zhang, greater Melbourne market is really, is consumer sentiment, and we talk about interest rate cuts. So again, we’re not here in the game of forecasting interest rate cuts, but I don’t think the interest rate cuts that we may see this year will have a significant impact of buyers borrowing capacity, and it’s not going to have a massive correlation to market movement, but what it will do is it will create a significant amount of positivity and strong consumer sentiment, which will probably likely have a more of a positive impact on market movement. So I think speaking to our client base, where we’ve got a good selection of 320, odd clients that we’ve worked with over the years, they’re the ones now that have a good portfolio. Other markets. They’re now looking to places like Melbourne and say, Well, hang on, we’ve, you know, we’ve got good equity positions. Let’s get a holding, get a property in a market like Melbourne. It’s never been cheaper, and it’s unlikely, never to be at these levels for ever again. It’s a good opportunity to, you know, to cement yourself a bit of real estate in, you know, in that market to take advantage of that upside. So that kind of sentiment we’re already seeing within our own client base, which is quite interesting in terms of we talk about data, any green shoots in the data that we’re seeing? I know some of the properties that were recently bought, we’re starting to see a nice kind of downward slope from a days on market perspective, stock and market percentage, anything in particular you want to share there, I
Speaker 2
look in that northern inner Melbourne corridor is starting to perform really well, as you say, that compounding of days on market and stock on market declining really starting to show some increased activity in that area, speaking to agents on the ground there as well, and recent Purchase in that corridor. Yeah, we’re really excited about it, and that’s the same for some pockets in Geelong that we’re starting to look at as well those days on markets, just some of those things that just indicate that those early signs to growth and speaking to the ages on the ground are also suggesting some increased investor activity as well, and certainly further interest through those open homes with more groups coming through. So some really positive signs. Suspect that we’ll hear more about it as the year wears on, as well, when all the experts get a hold of those bits and pieces. But right now, drilling down, you can see some good positive signs. I
Speaker 1
guess when we talk about the market performance since COVID, yes, it’s been poor. There’s no denying that. I guess a lot of it’s been impacted by government initiatives and whatnot, or a lackluster government, or whatever way you want to look at it. And there’s been some pretty key pieces of legislation released or announced and legislated on specifically aimed at property investors. I think it’s important to really highlight those, because although there’s a bit of positivity in that market, there’s also a few things that the property investors need to be aware of and need to factor in when they’re deciding whether or not it’s the right market for you. And I think the first one, which is had plenty of time on the airways, is land tax. The big change on that was pretty much the removal of the land tax threshold. So in most states, if not all states, you’ve got a land tax threshold. As an individual buyer, in Melbourne, it reduced from they quote me on it was like 600,000 to 30,000 so that means that you’re paying land tax instantly. Those numbers might not be 100% but anything else that you’ve that’s been legislated on that investors and listeners need to be aware of before considering a play down in Melbourne.
Speaker 2
Yeah, I mean, really quickly on the land taxi. You’re right. That’s that’s been a massive change. And I think over the past couple of years, since it’s been introduced up, people have just packed up and and sold and, you know, either invested elsewhere or, you know, changed the asset class. So it’s been a big thing. But therein lies opportunity. You know. As you said earlier, Warren Buffett be greedy when others fearful and fearful on it, it creates opportunity. So the other big one was the changes to the rental reforms there. Back in 2021 they introduced 130 changes, approximately. And speaking to property managers, there are forecasts for some additional changes to come as well. So it’s a little bit unknown, you know. But again, some people have just thrown their hands up and said, that’s enough. We’re going to move on. But it creates opportunity. You know, vacancy rates drop, rental prices, you know, your yields are going up. So
Speaker 1
there’s opportunity. So I think there’s something announced around holiday. Let’s you
Speaker 2
got to live in your property, or at least reside in it for four weeks a year. And there’s the Victorian vacant land tax as well. And so there’s a lot of lot of changes are coming in that area, but, but another reason that people are just, you know, if I’m going to get taxed there for having a holiday home again, that’s it.
Speaker 1
Sell out. So that affects all the wealthy where their homes in Sorrento, yeah,
Speaker 2
that’s right. Port. Clever. Chat to the in laws and see all key
Speaker 1
things that people need to be aware of. I think, like I said, positivity is one thing and and it’s good to really get excited about those things, but there’s always the market has underperformed for a reason. You just need to really tread carefully. We put an Instagram story up the other day, and we’re asked, which markets are we seeing most market pressure in there’s actually a couple of questions centered around market pressure. So I think from what we’ve seen, and again, most of our buying has been on the northern fringe of Melbourne, anywhere from Brunswick up to that kind of Craigieburn sort of precinct. What’s the kind of market pressure that we’ve seen in those areas? And any, any particular key sort of suburbs that we’ve been active in, and we want to drop on the podcast for our listeners.
Speaker 2
Yeah, look, I think, as you say, I said the inventory level and stock by market, which is just lacking, and the increased activity and interest in some of those areas. So as you said, that Northern Corridor absolutely reservoir. Runs with COVID right up through there. We spoke earlier about those green shoots, but, yeah, seeing market pressure in those areas, and exploring some of the Geelong suburbs as well that we’ve identified some
Speaker 1
Well, some of those are really exciting, big blocks of land, subdividable, likely good, solid homes on them that can have good renovation potential, but, but just the prices that we’re looking at is, is phenomenal. Yeah,
Speaker 2
yeah. Look, some of your listeners might know the reference to Franco co who was a furniture store owner in Footscray, but he used to say, you know, sale, sale, sale. Everything’s on sale. The Victoria markets on sale at the moment, it’s what an opportunity to get into,
Speaker 1
I guess, one of the downward or the downsides of the Melbourne market, again, not everywhere, but your rental yields are still pretty tight across Melbourne Geelong. So that’s something that that investors need to, I guess, factor in. But look that that will change, no doubt, as as investor activity, you know, ramps up and and the market starts to correct itself, but, but, yeah, holding costs are, are a little higher. Yes, you’ve got your land tax, then throw in a higher than other state stamp duty that that’s just the sweetener on the top, but, but look, I think, as an investor, again, I’ve been doing this for a long time so have you it’s, it’s trying to look past these, you know, these, these, these costs, that that, yes, you need to consider them. But if you can see the bigger picture, again, we’re investing most likely for the longer term, as opposed to that sort of short term sentiment. But as a long term investor, you know, getting into some of these, these markets where we’re starting to see a bit of a turn in the data, bit of positivity on the ground. There’s, like you said, that’s the opportunity, right? That’s right. Well, that concludes today’s episode. Big thanks to Damian Fletcher for joining us and sharing his local market intelligence. Thanks for jumping on. Damien. Pleasure Ben. Thanks so much for having me. If we take a backward step and look at key advantages of investing in Melbourne or Geelong and surrounds, inbuilt equity in the undervalued housing market, I think is the first point to make. You know, there’s, there’s a lot more upside than upside potential, than downward risk. We’re starting to see some green shoots in the data. So for property investors out there, get stuck into that sort of the data and really analyze where you can start to see the trend starting to move. Population growth, I think, is going to be huge and a big key fundamental that will propel the market moving forward. Buying at the low point of the cycle is what most investors should really be considering. But like all things, there’s a lot of positivity around there. Tread carefully. Understand, you know, the costs involved in in investing in these markets, and invest with caution, as always. We hope you enjoyed this episode, and again, the key takeaways for you are, have a look at Melbourne, Geelong and other large Victorian cities, which which may be undervalued, understand the downsides, ie, low yields, land tax, etc, buy with confidence, knowing it’s a large, sophisticated economy that has been poorly managed potentially. So a good upside potential there. And not all Melbourne, not all parts of Melbourne and Geelong will perform well, so get your location selection right. Thank you until next time.
Speaker 3
Thanks for listening to this episode of navigating property with Ben Paul. Be sure to click follow so you never miss a new episode. And for more insights, visit bfpproperty.com catch you next time you
