Victorian Property Update – National Growth Surges While Victoria Quietly Rebuilds Momentum
Australia’s housing market continues to show resilience in early 2026, with annual growth accelerating nationally even as momentum varies significantly across the country.
According to the latest Cotality data, national dwelling values have increased 9.9% over the past 12 months, marking the fastest annual growth pace since mid-2022.
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Quarterly growth has slowed slightly to 2.1% nationally, indicating that while price growth remains strong, the pace of gains has begun to moderate compared to earlier in the cycle.
Across Australia, regional markets continue to outperform capital cities, with combined regional dwelling values up 11.1% annually compared with 9.6% across the capitals.
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At a national level, this reflects an ongoing theme of tight supply, resilient demand and improving lending activity — particularly from investors.
Melbourne: A Market Lagging the Nation, But Holding Firm
Melbourne’s property market remains one of the more measured performers among the major capitals.
Over the past 12 months, Melbourne dwelling values have increased 4.7%, notably below the national average of 9.9%.
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Over the most recent quarter, values have been slightly negative at –0.4%, indicating that Melbourne has entered a period of consolidation after earlier growth phases.
Importantly, Melbourne values now sit around 1.0% below their previous peak recorded in March 2022, meaning the market has yet to fully reclaim its prior cycle highs.
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This relative underperformance compared to other capitals has been a defining feature of the national housing cycle over the past two years.
While markets like Perth, Adelaide and Brisbane have surged well beyond previous peaks, Melbourne has been slower to move — partly due to affordability pressures, population movements during the pandemic and policy settings affecting investors.
However, slower growth does not necessarily indicate weakness. In many ways it reflects a market that is stabilising and resetting while other regions run ahead.
Regional Victoria Continues to Perform
Outside Melbourne, Regional Victoria has recorded annual growth of 7.8%, comfortably outperforming the Melbourne metropolitan market.
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This continues a longer-term shift that began during the pandemic, where lifestyle-driven migration and remote work flexibility increased demand for regional property.
Although the pace of growth has moderated compared with earlier peaks, regional markets remain an important component of Victoria’s housing story.
Investor Lending Is Accelerating Again
One of the most notable structural shifts in the current housing cycle is the return of investor activity.
Across Australia:
• Investor lending rose 7.9% over the December quarter
• Investment lending is 31.8% higher over the past year
• Investors now account for 39.7% of all lending nationally
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This share remains well above the long-term average of around 33.5%.
Investor participation often acts as a second stage of a housing recovery cycle. Owner-occupiers typically lead the early stages of growth, followed by investors once price momentum and rental returns become clearer.
Given the continued strength in rental markets across the country, it’s not surprising that investors are re-entering the market more confidently.
Entry-Level Property Leading Growth
Another key trend emerging from the data is the stronger performance of more affordable housing segments.
Across capital cities:
• Lower quartile home values rose 11.5% annually
• Upper quartile homes rose only 6.6%
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This gap highlights how affordability pressures are shaping the market.
Buyers are increasingly competing for more accessible price points, particularly first home buyers and investors targeting stronger rental yields.
Listings Remain Tight Across Australia
Supply remains one of the most important drivers of the current housing cycle.
New listings nationally are tracking about 4% below the five-year average, while total listings are 14% lower than the same time last year.
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With fewer homes available and buyer demand still relatively strong, this imbalance continues to place upward pressure on prices.
At the same time, auction clearance rates have softened slightly, sitting around 60.9% across the combined capitals, down from the peak of 72% in late 2025.
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This suggests the market is transitioning from a rapid growth phase into a more balanced environment.
Rental Markets Remain Tight
Australia’s rental market continues to face supply shortages.
Vacancy rates are sitting around 1.5% nationally, near historic lows, supporting rental growth of 5.5% over the past year.
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In Melbourne specifically, rents have increased 3.9% annually, while Regional Victoria rents are up 5.4%.
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This ongoing rental pressure is one of the key reasons investors are returning to the market.
Interest Rates and Lending Conditions
The Reserve Bank lifted the cash rate 25 basis points to 3.85% in February, with financial markets currently pricing in the possibility of another rate increase later in 2026 IF inflation remains elevated.
Mortgage rates have already begun adjusting higher in response, with variable rates sitting above 5.5% for owner occupiers and slightly higher for investors.
While higher borrowing costs continue to influence buyer behaviour, they have not significantly slowed housing demand so far.
What This Means
First Home Buyers
Entry-level property is seeing the strongest growth across the market.
For first home buyers, this reinforces an important reality — waiting for prices to fall significantly may mean competing in the most in-demand segment of the market.
Preparation and borrowing capacity remain critical.
Melbourne Homeowners
Melbourne’s slower growth compared with other capitals may feel frustrating in the short term.
However, being only 1% below previous peak levels means the market is relatively stable and positioned differently from cities that have already experienced large surges.
Property Investors
With rents rising, vacancy rates low and investor lending accelerating, the investment landscape is becoming more active again.
Markets with strong rental fundamentals and constrained supply are likely to remain attractive for long-term investors.
Outlook for the Next 6–12 Months
The current data suggests Australia’s housing market is entering a moderate growth phase rather than an accelerating boom.
Key factors likely to shape the next stage of the cycle include:
• The direction of interest rates
• Investor participation levels
• Continued supply shortages
• Population growth and migration trends
Overall, housing demand remains resilient, but the pace of price growth is likely to be more measured than in the previous year.
My Take
When I look at this data, two signals stand out.
First, investor lending is rising sharply again, now accounting for nearly 40% of all new lending. That is a meaningful shift in capital flow. Historically, when investors re-enter the market after a period of owner-occupier dominance, it often marks the transition into the next phase of the housing cycle.
Second, Melbourne continues to lag the national growth trend. While markets like Perth and Adelaide have surged well past previous peaks, Melbourne is still sitting roughly 1% below its 2022 high.
It doesn’t necessarily mean Melbourne is weak. In many ways, it suggests the city is still in the earlier stages of the current cycle while other markets are further along.
When markets move at different speeds, it often creates opportunity for those who are thinking longer term rather than reacting to short-term momentum.
Melbourne remains one of the largest population centres in the country, and housing supply continues to struggle to keep up with demand.
In my experience, cycles often reward patience. The key isn’t trying to predict the next move month to month — it’s positioning yourself well before the next major shift becomes obvious to everyone else.
Data referenced from Cotality (RP Data) Monthly Housing Chart Pack – March 2026
