What is fueling property optimism?

Key Market Activity Highlights

• Melbourne home values have now increased every month in 2025, with units leading the rebound—up 5.9% since February in some inner-city areas.
• Despite gains, prices remain 5.4% below the March 2022 peak, indicating significant upside potential for long-term buyers.
• Outer suburbs such as Tarneit, Melton South, and Clyde North are attracting interest from first-home buyers and investors due to affordability and infrastructure investment.

Structural Shifts & Government Activity

Planning reform and housing policy are at the forefront of Victoria’s property landscape:

• The government has rebranded the Suburban Rail Loop as a housing-enabler, projecting 70,000 new homes along the corridor.
• Fast-tracking of planning permits is underway, with a focus on making Victoria the “townhouse capital” of Australia.
• Stamp duty concessions on off-the-plan purchases have been extended until October 2026, offering buyers savings of up to $28,000 on a $620K property.

However, investor confidence has been dented by the COVID Debt Levy, which is effectively doubling annual land tax on some homes. Some properties worth $1M+ are facing extra tax burdens of $10,000+ annually.

Rental Market & Investor Trends

While rental growth nationally has slowed to 3.1% annually, rental values hit a record high in March.

In Victoria:

• Rent growth expectations have been revised slightly downward to 2.2% in the next 12 months.
• Investor activity remains low, with local investors accounting for just 9.1% of sales—the lowest of all states.
• Interestingly, first-home buyer activity in Victoria is the highest in the country (37.6%), signaling a new generation entering the market as conditions stabilise.

The Road Ahead

Expect continued signs of stabilisation and modest price growth through the second half of 2025. NAB forecasts a +2.3% increase in Melbourne prices this year, accelerating to +5.5% in 2026. With more rate cuts forecast and buyer sentiment improving, Victoria appears to be transitioning into the next growth phase—but selectively and with some caution.