Victorian Property Market Update [January 2026]
Steady Growth, Rising Investor Activity & Entry-Level Pressure
National home values rose 8.6% in 2025, despite interest rates remaining elevated and the RBA lifting the cash rate to 3.85%.
That’s an important starting point.
In a higher rate environment, the broader Australian market has continued to show resilience. Several capital cities are now sitting at record highs, and demand remains active across much of the country.
Victoria, however, has moved at a more measured pace.
Melbourne: Growing, But Not Overheated
Over the past 12 months, Melbourne dwelling values have risen 4.8%.
Quarterly growth sits at 0.8%, with December slightly negative at -0.1%.
Importantly, Melbourne remains approximately 0.9% below its 2022 peak, while cities such as Perth, Brisbane and Adelaide have already surpassed theirs.
That tells us two things.
First, Melbourne has lagged the national market.
Second, it hasn’t overheated.
When a major capital city underperforms relative to the rest of the country, it often becomes more interesting to investors looking for relative value. Markets rarely move in sync forever. Capital tends to flow toward perceived opportunity.
Regional Victoria: Quietly Stronger
Regional Victoria has actually outperformed Melbourne over the past year, recording growth of around 6%.
I’m seeing increased investor activity in these areas — particularly from buyers using buyers agents to secure property in stronger-yielding regional locations.
This internal divergence within Victoria is worth noting. Melbourne may represent long-term value positioning, while regional markets currently offer stronger yield dynamics.
The strategy depends on the objective.
Investor Lending Is Climbing
Victoria recorded a 16.3% increase in investor lending, the third strongest lift in the country.
That’s significant.
Investor lending doesn’t always translate immediately into price growth, but it often reflects positioning ahead of it.
This trend aligns with what I’m seeing on the ground. Conversations with buyers agents and conveyancers suggest investor enquiry is rising — both in Melbourne and across regional Victoria.
When investor confidence begins lifting while a market is still relatively subdued, it’s worth paying attention.
The Lower End of the Market Is Tightening
Nationally, the lower quartile of the market outperformed premium property — growing at roughly 11% compared to 6.7% at the top end.
That tells us competition is strongest where affordability matters most.
Now layer in:
Rising investor lending
Government schemes supporting first home buyers
Downsizers releasing equity
Listings remaining below long-term averages
It’s not surprising that entry-level property is experiencing pressure.
What This Means
For First Home Buyers
If you’re trying to perfectly time the market, that’s always difficult.
But what we’re seeing right now isn’t weakness — it’s steady conditions with competitive pressure at the affordable end.
With more investor activity returning and government schemes expanding accessibility, entry-level segments may remain supported.
That doesn’t mean rushing in.
But it does mean preparation matters more than hesitation.
For Investors
Victoria has lagged most of the country over the past 12–18 months.
At the same time, investor lending is rising and regional markets are showing strength.
That combination can sometimes signal early repositioning.
Melbourne isn’t currently a yield story.
But it may increasingly become a relative value story.
For long-term investors, those environments are often worth evaluating carefully.
Outlook for 2026
Despite the cash rate sitting at 3.85%, the Victorian market continues to show resilience.
Supply remains constrained.
Investor confidence is improving.
Entry-level competition is tightening.
I still see growth in the Victorian market.
Not explosive growth.
Not speculative growth.
But gradual upward movement.
If capital begins rotating back toward relative value markets, Victoria could quietly strengthen over the next 12 months.
My Take
Affordability has been the dominant theme in property for several years now. With expanded government schemes, ongoing cost-of-living pressure, and rising investor activity, it’s no surprise the entry-level segment is tightening.
When I look at Victoria specifically, I see a market that has lagged much of the country — yet investor lending has lifted meaningfully and regional areas are already showing strength.
That combination gets my attention.
I think it’s important to step back and view property ownership through a long-term lens, aligning any decision with your personal objectives rather than short-term headlines.
From where I sit, Victoria feels like it’s quietly positioning for its next growth cycle.
Data referenced from Cotality (RP Data) Monthly Housing Chart Pack – January 2026.
