Melbourne, VIC – Fairhaven Homes, a leading builder of quality new homes across Melbourne, Geelong, Gippsland, and Melbourne’s North and West, is optimistic about the housing market outlook for 2025 following the release of the latest KPMG Residential Property Market Outlook.

According to the report, house prices in Melbourne are forecast to rise by 3.5% in 2025, with unit prices set to climb 4.7%, before even stronger growth in 2026 (KPMG, 2025). These projections are being driven by renewed buyer confidence, improved lending conditions, and an anticipated easing of interest rates in the second half of the year.

“The KPMG data confirms what we’ve been seeing across our display centres – buyer activity is picking up,” said a spokesperson from Fairhaven Homes. “There’s a renewed sense of urgency, especially among first-home buyers and upgraders, who are trying to get into the market before prices accelerate further.”
Victoria’s property market has already kicked off 2025 with strength. Sales activity surged by 24% in January alone, and home prices reached levels second only to the 2022 peak (Citified.ca, 2025). The strongest growth has been recorded in detached homes and townhomes, with buyers looking beyond the city fringe to secure more space and long-term value.

Key Trends Affecting Homebuyers and Builders in 2025
Fairhaven Homes anticipates several important implications for homebuyers and the building industry in Melbourne and surrounding regions:

Affordability Pressures Shift Demand Toward Townhomes and Units: With detached house prices continuing to rise, many buyers are now turning to more affordable housing options like units and townhomes. This aligns with KPMG’s forecast that unit prices will outpace house prices over the next two years, as attached dwellings become the more realistic entry point for buyers.

Construction Costs Moderating, But Supply Still Tight: While building approvals are on the rise and construction costs have begun to stabilise, there remains a time lag between approval and completion. Fairhaven Homes notes that delivery timelines are still impacted by skilled labour shortages and planning delays, although improving compared to previous years.

Investor Interest Slowly Returning: With expectations of a stronger 6% house price growth in 2026, the investor market is also starting to stir. This will place upward pressure on demand, particularly for properties in growth corridors where rental yields remain solid.

Rise of Suburban and Regional Demand: As demand continues to outstrip supply in Melbourne’s urban core, buyers are looking to high-growth areas in Melbourne’s North, West, Geelong and Gippsland. These regions offer greater affordability and access to lifestyle infrastructure, aligning with Fairhaven’s core building footprint.

“Many of our buyers are realising the value of going a little further afield,” the Fairhaven Homes spokesperson added. “With well-connected estates in areas like Clyde North, Armstrong Creek, Truganina and Warragul, we’re helping more families get the home they want without compromising on quality or location.”

A Word to First Home Buyers: Act Fast in 2025
With interest rates likely to dip in the second half of the year, Fairhaven Homes advises buyers to act quickly in the current market window. “Now is the time to take advantage of competitive pricing and grants before the market heats up further in 2026,” the spokesperson said.

Fairhaven continues to offer a wide range of home designs and house-and-land packages tailored to first-time buyers, growing families and investors alike.

Sources:
KPMG. (2025, January). Residential Property Market Outlook. Retrieved from: https://kpmg.com/au/en/home/media/press-releases/2025/01/house-and-unit-prices-to-rise-in-2025.html

Citified.ca. (2025, February 4). Victoria’s 2025 housing market is off with a bang as sales jump 24%, prices 2nd only to 2022’s record highs.