How Victoria’s housing policy announcements will shape the 2025 market

As 2024 draws to a close, Victoria’s property market is positioned for a fresh wave of opportunity. Despite ongoing economic challenges and shifts in affordability, there promising signs of market recovery and growth. Recent state government policy announcements, while significant, have raised concerns among experts like Resimax Group’s Founding Director and CEO, Ozzie Kheir, who warns that the long timelines outlined may not adequately address the urgent need for housing supply.

Drawing on his extensive expertise in land acquisition and master-planned development, Ozzie recently shared his solutions to drive demand and stability. His insights highlight how policy reforms focused on urgency and faster approval processes, alongside enhanced collaboration between government and developers, can restore market confidence and accelerate market growth.

Melbourne’s 10-year housing strategy: 180,000 new homes and major greenfield land expansion

Plans to release 27 new greenfield areas across Melbourne’s outer north, west, and southeast over the next decade were announced by the state government in October to deliver up to 180,000 new homes to address Victoria’s ongoing housing crisis.

While the 10-year housing plan marks a step forward, Ozzie remains cautious about its effectiveness, believing the long timelines do not address the state’s urgent need for supply.

“While it is encouraging to see set timeframes, we believe these timelines are too broad and do not address the urgent need for supply to meet the government’s housing targets effectively,” he explained.

The effectiveness of the announcement will depend heavily on detailed and timely execution. Ozzie emphasised that current delays in planning permits, often taking up to three years, are exacerbating housing costs and limiting affordability.

“Building approvals and new dwelling commencements continue to trend down to historic lows, while greenfield developers continue to sit on the sidelines incurring extra costs that will ultimately be passed to the end user. This is making it less affordable for families to enter the property market,” Ozzie stated.

Reflecting upon these challenges, Ozzie called for greater collaboration between government and developers to address the growing housing crisis.

“The affordable housing crisis and supply issue purely sit in the hands of the state government’s ability to fast-track approvals.

“Major developers within Precinct Structure Plan (PSP) zones are starting to take proactive steps to handle some of the administrative tasks themselves, aiming to address supply issues by speeding up the process and ensuring development moves forward more efficiently.

“Despite these efforts, they are still limited by external factors, underscoring the obvious need for greater collaboration between government and industry to unlock the housing stock that Victoria so urgently requires,” he concluded.

Looking ahead: What the 2025 property market holds for Victoria

Despite the challenges, Ozzie remains optimistic about the recovery trajectory in 2025. “Investors are starting to regain confidence; especially as early signs of stabilisation emerge in the market. Once policies shift to encourage supply and development, we’ll see an acceleration in activity,” he predicted.

One of Ozzie’s primary forecasts for 2025 is the resurgence of investor activity driven by an eventual reduction in interest rates. “Interest rate cuts are inevitable. The longer the delay, the steeper and closer together they’ll be. I believe we’ll see two to three rate cuts in 2025, which will be a major driver of market growth capacity.”

Another key factor will be the absorption of residual stock, with the existing housing supply likely to be snapped up quickly once market conditions improve. “We’re already seeing limited stock in certain areas of Victoria, and this shortage will only continue to intensify. As supply dwindles, demand pressures will push housing prices higher,” he added.

However, Ozzie warned of continued pain in the construction sector. “The building industry is still struggling with a backlog of delayed projects and a shortage of new approvals. Without significant intervention from state and federal governments, we’ll see further job losses, reduced output, and a lack of work to sustain the industry once the backlog of delayed projects is cleared. Once demand bounces back, the industry will not have enough capacity to meet future needs, exacerbating the housing shortage and affordability crisis,” he said.

Looking ahead, Ozzie emphasised the importance of fostering consumer confidence and action-oriented policy reform. “The property market thrives on optimism. People need to see a clear path forward, where supply issues are resolved, affordability improves, and stability is restored. Only then can we build a sustainable market.

“There’s a lack of decision-making and urgency. We need to see policies that bring confidence back to the people. Our government needs to understand that people are willing to fight through tough times if they see hope,” he added.

Victoria’s housing market stands at a pivotal point, with 2025 set to bring both opportunities and challenges. Under Ozzie’s leadership, Resimax Group continues to navigate this landscape with foresight and adaptability, championing solutions that address the state’s housing needs and enhance long-term market stability. As the year unfolds, it will be crucial for the government and the property industry to work together with urgency, focusing on outcomes that reflect the evolving needs of the market.