GrayJohnson, a stalwart of Melbourne’s property market since 1914, has witnessed—and shaped—more than a century of real estate cycles. Their 2025 Economic and Property Market Update offers a timely lens on how inflation, government policy, and market fundamentals are intersecting in today’s environment.
While the Reserve Bank has managed to steer inflation back toward its target range, the pace of moderation remains slow. Household spending is steady but cautious, with consumers increasingly focused on value. Elevated construction costs continue to constrain both residential and commercial supply, a trend that is especially acute in high-density developments and new housing projects.
This supply squeeze is central to Australia’s housing shortage, which has become a headline issue in recent months. According to GrayJohnson’s report, new dwelling construction in Victoria remains steady, but weak commencements and capacity constraints are holding back activity. Building approvals for high-density developments have picked up, yet elevated costs challenge the viability of many projects.
In response to the housing crisis, state and federal treasurers have announced a suite of productivity-enhancing reforms aimed at accelerating construction and boosting supply. Recent measures include streamlined planning approvals, targeted stamp duty reductions for off-the-plan purchases, and incentives for higher-density developments near transport hubs. These policies are designed to address affordability and unlock new opportunities for developers and investors.
GrayJohnson’s development advisory team says while rising construction and labour costs, tighter debt conditions, and increased taxes on foreign purchasers have put downward pressure on land values, limited supply and steady domestic demand have helped stabilise the market. In 2024–25, Victoria saw approximately $2.3 billion in development site transactions, with most activity concentrated in metropolitan Melbourne.
Emerging trends such as energy-efficient builds, mixed-use projects, and the rise of co-living and co-working spaces are reshaping the development landscape. Regional areas, where property prices remain more affordable, are also attracting increased interest from both developers and investors.
GrayJohnson’s century-long heritage is more than a legacy—it’s a strategic advantage. Their deep institutional knowledge, combined with modern market intelligence, enables them to interpret macroeconomic signals and translate them into actionable property strategies. As inflation remains sticky and government reforms reshape the landscape, GrayJohnson’s team offers perspective-driven counsel to help clients navigate uncertainty and seize emerging opportunities.
As Australia’s commercial property market continues to evolve in response to sticky inflation, housing shortages, and new government reforms, expert guidance is more important than ever. Whether you’re looking to explore how market shifts may impact your property interests, refine your investment strategy, or simply want to understand the latest trends, GrayJohnson’s experienced team is ready to help.
With over a century of trusted service and deep market insight, GrayJohnson offers tailored advice for property owners, occupiers, and investors. To discuss your goals or learn more about the latest economic and property market developments, reach out to their specialist team:
For more information, visit grayjohnson.com.au or drop by their Melbourne office at Level 7, 41 Exhibition St.
GrayJohnson’s team is ready to help you navigate the complexities of today’s market and position your property interests for long-term success.
