The Melbourne greenfield land market is regaining momentum, with sales volumes steadily climbing after a prolonged downturn. But while the data points to recovery, one key factor continues to hold the market back: confidence.
In a recent iBuildNew interview, Johnathon Driessen, General Manager of Communities at RPM Group, unpacked what’s really happening across Melbourne’s land market and what to expect through 2026.
After hitting a low point in 2023, the market has been rebuilding year-on-year.
Sales increased from around 8,000 lots in 2023 to 9,000 in 2024, and approximately 12,500 in 2025. Looking ahead, RPM Group forecasts a return to more normalised conditions.
“We’re forecasting that we potentially could hit 15,000 to 16,000 this year,” Driessen says.
That would bring Melbourne back in line with long-term averages, signalling recovery rather than rapid growth.
The turnaround is significant when you consider just how soft the market had become. Despite having far more active projects than a decade ago, 2023 delivered one of the weakest results in recent history.
Now, with three consecutive years of improvement, the trajectory is clearly upward.
Despite rising sales, demand is not the issue.
“There are absolutely buyers out there that want to purchase property,” Driessen explains. “We just need to get the media talking positive news.”
Interest rate increases, global instability and persistent negative headlines have all impacted sentiment. Even motivated buyers are taking longer to commit.
Late 2025 offered a glimpse of what happens when confidence improves. November recorded around 1,400 lot sales, the strongest monthly result in three years.
The takeaway is clear: when sentiment lifts, activity follows quickly.
Affordability remains the biggest structural constraint in the market.
With borrowing capacity limited and stock under $750,000 scarce, buyers are adjusting expectations and turning to smaller lot sizes.
“Small lot housing code has been the saviour to the market to some degree,” says Driessen.
Demand is now heavily concentrated in compact lot configurations, particularly those under 300 square metres. These products are transacting significantly faster than traditional larger blocks.
The shift reflects a broader trend. Buyers may enter the market wanting more space, but affordability is ultimately dictating decisions.
Despite the challenges, first home buyers remain a critical part of the market.
Owner-occupiers make up around 64% of buyers, with roughly half of that group entering the market for the first time.
At the same time, investor activity has surged to around 36%, well above historical norms. Migration also continues to underpin demand, with Australian and Indian buyers forming the two largest cohorts.
This mix of first home buyers and investors is helping sustain momentum, even as sentiment fluctuates.
Not all parts of Melbourne are performing equally.
The western corridor continues to lead in overall sales volume, largely due to the number of active projects. However, on a per-project basis, the northern corridor has recently delivered the strongest results.
Across all regions, one factor stands above the rest.
“When you look at what’s important to buyers, the first one they say is location, second is price, third is lot size,” Driessen says.
Projects with strong fundamentals, particularly location, pricing and product mix, are consistently outperforming the market.
In softer conditions, larger developers are increasing their presence.
Well-capitalised groups are leaning into the market, increasing marketing spend, adjusting product offerings and launching more aggressive campaigns. This allows them to capture market share while others pull back.
However, Driessen notes that smaller developers can still compete effectively if their projects are well-positioned.
The fundamentals remain the differentiator.
Looking ahead, the key unlock for the market is confidence, not demand.
Affordability challenges are unlikely to resolve quickly. Instead, the next phase of growth will depend on improved sentiment, particularly driven by gains in the established housing market.
“We can’t fix affordability overnight,” Driessen says. “But what seems to support bringing buyers into market is positivity.”
A projected rise in established housing values could help restore balance, enabling more buyers to re-enter the market with increased equity.
The outlook for 2026 is cautiously optimistic.
Sales volumes are expected to return to normal levels, supported by improving fundamentals and steady demand. Projects that are well-priced, well-located and aligned with buyer needs will continue to perform.
“It’s better than it was three years ago, better than it was two years ago, and we’re forecasting this year to be better again,” Driessen says.
For the Melbourne land market, the recovery is underway. Now, it’s a matter of confidence catching up with reality.
