Victoria defies other states with an increase in new home sales

While the housing market in most Australian states is experiencing a downturn, Victoria is bucking the trend with a notable increase in new home sales. According to the latest report from the Housing Industry Association (HIA), Victoria recorded a 7.1 per cent rise in new home sales in August, contrasting sharply with declines in the other four large states.

HIA Senior Economist Tom Devitt highlighted the significance of these figures, stating, “Victoria saw a 7.1 per cent increase in new home sales in August, while the other four large states all declined.” This growth is part of a broader upward trend observed over recent months. “New home sales in the three months to August 2025 in Victoria were 6.7 per cent higher compared to the previous quarter and 23.8 per cent greater than the same period a year earlier,” Devitt added.

The HIA New Home Sales report, a monthly survey of the largest volume home builders across Australia’s five largest states, serves as a leading indicator of future detached home construction. The report identifies several key factors contributing to Victoria’s robust performance, including strong population growth and tight labour markets.

“Strong population growth and tight labour markets across Australia had been bringing home buyers back to the market in a number of states, while shortages of affordable shovel-ready land held back the market in Victoria,” explained Devitt. Despite these challenges, Victoria’s housing market has been buoyed by recent monetary policy adjustments.

The Reserve Bank of Australia’s (RBA) decision to implement three cuts to the cash rate has played a crucial role in stimulating housing demand in Victoria. “Three cuts to the RBA’s cash rate have helped catalyse underlying housing demand in Victoria, with both new home building activity and prices in the established housing market picking up this year,” Devitt noted.

However, the future trajectory of Victoria’s housing market is contingent on several factors. “The peak of the coming cycle will be determined by how quickly policymakers can bring shovel-ready land to market, address shortages of skilled labour and reduce tax and regulatory burdens on home builders and buyers,” Devitt warned. These elements are crucial for sustaining the momentum in new home sales and addressing the challenges faced by potential homebuyers.

First home buyers, in particular, face significant obstacles in the current market environment. “First home buyers, in particular, face significant hurdles to obtaining a mortgage and realising the dream of homeownership,” Devitt acknowledged. The Australian Government’s recent policy changes, however, offer a glimmer of hope for this demographic.

The removal of the requirement for mandatory Lenders’ Mortgage Insurance (LMI) for first home buyers is expected to provide a significant boost to new home sales. “The supply side stimulus resulting from the Australian Government’s decision to remove the requirement for mandatory Lenders’ Mortgage Insurance (LMI) for first home buyers, will boost new home sales,” Devitt stated. This policy change is anticipated to reduce the financial barriers for first-time buyers, facilitating greater access to the housing market.

“Reducing the barriers to entry for first home buyers will lead to an increase in housing supply, putting downward pressure on prices beyond the short term and increasing rates of homeownership,” Devitt concluded. This optimistic outlook suggests that Victoria’s housing market could continue to thrive if policymakers and industry stakeholders effectively address the existing challenges.

As Victoria continues to defy national trends, the state’s housing market dynamics will be closely watched by both policymakers and potential homebuyers. The interplay between population growth, monetary policy, and government initiatives will be key determinants of the market’s future performance.