“Many buyers have been forced to re-assess their borrowing capacity and re-evaluate their buying decisions in light of interest rate rises. At the same time, they’re facing increasing residential construction costs, rising living expenses fuelled by inflation and higher home loan repayments,” he said.

“This is leading to a subdued market in the coming months, with a number of prospective buyers deciding to sit on the sidelines as a result of the uncertain climate.”

The slump in sales hasn’t yet hit the median land price. That grew by 3.6 per cent to a record level of $379,000 a lot over the quarter, although some predict prices will fall too.

Satterley said: “There will be a big price correction. This is a correction being driven by fast rising inflation. That is driving volatility in real estate trust stock share prices. Obviously, the residential outlook is worse than it was six months ago.″⁣

Shares in residential community developers like ASX-listed Peet and Cedar Woods fell to new lows in June, although they have since ticked up slightly.

Cameron Leggatt, executive general manager of development at Singapore-based Frasers Property, said the market had definitely come off.

Conditions were now “more steady” after a hectic period during COVID-19, in which there were unusually strong sales and price growth.

“Many buyers have been forced to re-assess their borrowing capacity and re-evaluate their buying decisions in light of interest rate rises.”

RPM’s managing director of project marketing Luke Kelly

“Inquiry is down 30 to 40 per cent. Land sales are down a similar amount in volume,” said Leggatt, whose company develops large Victorian estates like The Grove in Tarneit and Berwick Waters in Clyde North.

“With interest rates jumping as quickly as they have, it’s put a bit of uncertainty among buyers. A lot are sitting on their hands and waiting to see where interest rates land in the next six to 12 months.”

Buyers are more focused on Melbourne’s west (it accounts for 45 per cent of lot sales), where demand has shifted from Melton to Wyndham, according to RPM.

The Geelong growth corridor experienced the biggest fall in sales activity as its median lot price slid 0.5 per cent to $380,000.

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