Last week, we hosted our annual VIC State of the Market event at the RACV, where 180 attendees gathered to hear expert perspectives on the economic outlook and what’s in store for various asset classes. The room was buzzing with valuable discussions, providing an in-depth look at the key trends set to shape 2025.

Adelaide Timbrell from ANZ gave a lively economic update, predicting two rate cuts in 2025 (a mere 5 hours before one of those rates cuts were announced!) and pointing out how consumer spending habits are shifting while job security stays strong. GDP and consumption are expected to grow, but the housing market will likely stay pretty flat, with Victoria possibly seeing a small dip. Public demand and big infrastructure projects are keeping the economy steady, though high construction costs continue to be a challenge.

Next, Richard Temlett from Charter Keck Cramer shared an optimistic outlook for the residential property market, emphasising Melbourne’s strong fundamentals for future growth. He noted that Melbourne has climbed four spots on the affordability scale over the past year. Richard also highlighted changing living preferences, with rising demand for townhouses, house-and-land packages, and medium-to-high density dwellings. Meanwhile, vacancy rates remain at historic lows, as rising interest rates in 2024 have driven more rental properties into owner-occupier hands, further widening the rental supply gap.

Matt Clifford from Payton Capital provided insights into the industrial market through the lens of private credit markets. While industrial markets peaked in 2023, they continue to perform well as a resilient asset class. Australians are spending more online, with 12% of retail sales occurring digitally, and Victoria remains competitive with some of the lowest industrial land prices and rents in the country.

A quick bite to eat and we were back in the room with Tim Muir from Opteon who gave a comprehensive look into the industrial, retail and office markets. Addressing the challenges within commercial markets, a clear theme emerged: rising construction costs, high interest rates, and low unemployment remain significant barriers. In the retail sector, sustained remote work continues to impact foot traffic. Coupled with a 45% increase in online shopping by Australian consumers since 2020, this presents an increasingly complex outlook for the retail industry.

Georgia Warren-Meyers from Knight Frank gave an update on building sustainable cities through ESG considerations. She touched on data and inputs such as air and water pollution, data protection and board diversity and structure. She noted that a disclaimer regarding ESG is no longer acceptable in reports and valuers are now required to collect data and information and assess the different ESG attributes by covering off both positives and negatives as well as whether they are risks or opportunities.

Amid economic shifts, changing consumer behaviors, and the rising influence of ESG considerations, attendees left the event with valuable insights and plenty to reflect on. A special thank you to Anthony Salce from Opteon for expertly guiding the day as our MC and a big thank you to our event sponsors, Armstrong Biggs Fallon and Herron Todd White for their ongoing support.