A builder's perspective: reading the latest Thermometer report on Victoria

Year on year: property sales down 20%, new listings down 19%, active listings down 8%, absorption rate 35.2% to 30.5%, and months of available stock 2.8 to 3.3. Buyers are transacting less, and vendors are also pulling back or delaying. In Neeraj's view, a real collapse would show far more stock than buyers are willing to absorb, and that is not what the report shows. Buyers look cautious, with no sign of a widespread inventory glut.

Of Melbourne's 542 markets, 4 are Hot, 114 Warm, 273 Neutral, 112 Cool and 39 Cold, and only 17% have improved on a year ago. His read is that the cooling is broad rather than confined to a few suburbs. Most markets still sit at Neutral, so he reads it as a general cooling, not severe damage everywhere.

Melton and Wyndham scored 21 and 23, both Cold. As a developer, Neeraj sees two sides. Land may become easier to negotiate as competition eases. Weak conditions can also make finished product harder to sell, and cheaper land only helps if the end result still stacks up. In his view, population growth and housing shortages do not automatically mean strong buyer demand right now.

Regional Victoria has a low average score of 36.9, yet 50% of its markets are performing better than a year ago. Its absorption rate has lifted from 24.5% to 26.4%, and available stock has fallen. That combination suggests to Neeraj that demand may be slowly recovering while Melbourne keeps weakening, an early sign that regional Victoria is at a different point in the cycle. Market by market, he is watching Ballarat and selected Geelong suburbs. Bendigo looks mixed and Shepparton looks notably weak.

In Neeraj's experience, a suburb that is a hotspot today has often already had its move, and by the time it makes the headlines it can already be losing momentum. He asks the Enable research team to look at what is not a hotspot yet, because a Cool market can be recovering and the direction of change matters as much as the current score. It is one approach among others and carries no guarantees. He would want to see another quarter of improvement before calling any market an established recovery.