This marks a critical turning point in monetary policy, with the central bank signalling that inflation is now well within its target range. According to Commonwealth Bank of Australia economist Gareth Aird, the latest decision confirms that Australia has “slayed the inflation dragon”, clearing the way for long-awaited relief for borrowers.

At Barry Plant, we’ve already observed a clear resurgence in momentum across the Victorian housing market in recent weeks, particularly within the sub-$1 million segment. Increased activity from first home buyers and investors points to the early stages of a broader market recovery, especially in the more affordable price brackets. The recent interest rate cut is expected to further support this trend by easing borrowing costs and boosting buyer confidence. As these favourable conditions take hold, we anticipate a gradual strengthening of the market, paving the way for a more sustained upswing in the second half of 2025. This renewed energy aligns with growing optimism that the Victorian property market is transitioning into a new phase of growth following a period of subdued performance.

The move by the RBA to cut interest rates to 3.85% is expected to be the first in a gradual easing cycle, with further reductions forecast in August and November. If current projections hold, the cash rate could fall to 3.35% by the end of 2025. The move is set to provide meaningful relief for mortgage holders and support broader economic activity, particularly in the housing sector. Despite a strong labour market, including the creation of 89,000 new jobs in April, the RBA’s focus has shifted to ensuring financial pressures on households and businesses do not stifle growth.

The central bank’s shift to a more accommodative stance reflects a new phase for the economy, with inflation retreating and risks more evenly balanced. For the property market, this signals improved borrowing conditions and a likely boost in buyer activity across the country.

At the same time, Australia’s recent federal election has delivered another source of confidence, particularly in Victoria. The Albanese Labor Government has secured a decisive re-election, bringing a sense of clarity and direction that the real estate market had been waiting for. Political stability, regardless of which party wins, tends to underpin market confidence by removing uncertainty and allowing buyers, sellers, and developers to make more informed decisions. With the election outcome now settled, the Victorian property sector is experiencing a renewed sense of momentum.

From Melbourne’s bustling suburbs to its fast-growing regional centres, the effects of political certainty are already evident. Buyer enquiries are increasing, listing activity is rebounding, and developers are returning to projects they had previously put on hold. Real estate agencies across the state are reporting greater engagement from both local and interstate buyers, as Victoria cements its reputation as a stable and desirable place to invest in 2025.

A key factor driving this renewed interest is Victoria’s relative affordability compared to parts of New South Wales and Queensland. Melbourne and many of the state’s regional hubs continue to offer strong value, supported by a growing population and consistent rental demand. Interstate investors are increasingly viewing Victoria as a safer bet, drawn by high rental yields, robust infrastructure investment, and supportive government policy.

The re-election of the Labor Government means the continuation of several housing initiatives that are helping to shape this confidence. Programs such as the Help to Buy shared equity scheme are expanding, making it easier for first-home buyers to enter the market. Meanwhile, the national commitment to deliver 1.2 million new homes is expected to ease supply constraints over time. Continued investment in transport, education, and health infrastructure will further unlock development potential, especially in regional Victoria where accessibility and lifestyle appeal are already on the rise.

Regional centres like Geelong, Bendigo, Ballarat and the Latrobe Valley are benefiting from these upgrades, which are enhancing liveability and transforming long-term prospects for capital growth. With improved connectivity and services, these communities are attracting a growing number of buyers who see regional Victoria as an appealing alternative to higher-priced metro areas.

As a result, key market segments in Victoria are expected to remain active throughout the year. First-home buyers are taking advantage of government support and easing interest rates, while many families who delayed upgrading their homes during the election period are now resuming their plans. Investors, both local and from interstate, are drawn by a combination of stable governance, favourable lending conditions, and strong economic fundamentals.

In the months ahead, Victoria is poised to lead Australia’s real estate recovery. With interest rate relief on the horizon, a clear political path forward, and robust infrastructure support, the state’s property market is set for sustained growth and renewed confidence throughout 2025. With confidence returning to the real estate market, now is an ideal time to review your property goals and take advantage of emerging opportunities. Whether you're buying, selling, or investing, the team at Barry Plant is here to guide you with expert advice and personalised support every step of the way.