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Victorian Property Market : A Strong Start to 2025
As 2025 unfolds, the Victorian property market is demonstrating resilience and optimism, setting the stage for a year of growth and opportunity. Despite global economic uncertainties, the state's housing sector is poised for a robust performance, driven by factors such as population growth, infrastructure development, and strategic policy initiatives.
Economic Overview and Market Dynamics
Australia's property market is anticipated to experience steady growth, with home prices projected to increase by 4% in 2025, followed by 5% in both 2026 and 2027. This outlook is underpinned by strong population growth, chronic undersupply, and a resilient labor market. In Melbourne, the median house price currently stands at $939,965, reflecting a 0.5% monthly increase, indicating a gradual recovery from the downturn experienced in 2022 (reuters.com) (propertyupdate.com.au).
Melbourne's Resilient Housing Market
Melbourne's housing market has shown signs of improvement, with unit prices rising by 0.9% in the first quarter of 2025. This growth is attributed to factors such as increased population, affordability challenges, and expectations of interest rate cuts, which collectively support a recovery in the Victorian Property Market (rpmgrp.com.au) (heraldsun.com.au).
Regional Victoria: Growth and Investment Opportunities
Regional areas in Victoria are also experiencing positive trends. In the Victorian Property Market the average sale price increased by 4.1% between 2023 and 2024, from $927,033 to $965,394. The number of sales transactions rose by 60.7% during the same period, indicating a surge in buyer activity (blog.remax.ca).
Suburbs such as Point Cook, Werribee, and Tarneit are emerging as key investment hotspots due to ongoing infrastructure development and population growth. Investors focusing on these areas may benefit from capital appreciation and rental yield potential (reliancere.com.au).
Policy Initiatives and Government Support
The Victorian Government's aggressive housing strategies aim to build 2.24 million affordable homes by 2050, equating to 86,000 annually, to accommodate growing demand, largely fueled by increased immigration. This expansion plan includes high-rise developments in suburban neighborhoods, often bypassing local councils through the Development Facilitation Program (DFP), which eliminates appeal rights and local input.
Additionally, first-home buyers are increasingly opting for smaller deposits to enter the property market sooner, driven by rapidly rising house prices and expanded government support schemes. The federal Home Guarantee Scheme (HGS) enables purchases with low deposits and has been used by those without substantial parental financial support (news.com.au).
Challenges and Considerations
Despite the positive outlook, the property market faces challenges such as affordability concerns and potential interest rate fluctuations. The median home price now stands at $831,288—nearly eight times the national average income—reflecting persistent affordability challenges . Additionally, construction costs are easing in Sydney and Melbourne, but rising wages and labor shortages continue to pose challenges to project viability.
Optimistic six-year-old invests in the Victorian Property Market
A property investment expert is forecasting a surge of investor interest in the Melbourne market, anticipating significant house price growth in the years ahead. Despite increasing land tax costs and tighter regulations, Cam McLellan—founder and CEO of investment firm OpenCorp—says his company is actively encouraging investors to enter the Victorian market now, in preparation for expected price rises. OpenCorp advises a wide range of clients, including everyday investors, retirees, entrepreneurs, and professional athletes such as Horsham-born basketballer Mitchell Creek, who plays for both the Vancouver Bandits in Canada and Melbourne Phoenix (heraldsun.com.au).
Conclusion
The Victorian property market is off to a strong start in 2025, characterized by steady price growth, increased buyer activity, and strategic government initiatives aimed at addressing housing demand. While challenges remain, the combination of favorable economic conditions, infrastructure development, and policy support positions Victoria's property market for continued success in the coming years.