There’s no shortage of nervousness about Victoria right now. Rising rents, volatile rates, a relentlessly negative news cycle. It’s enough to make anyone hesitant about investing.
And maybe you’re starting to wonder … should I wait another year or two before heading down south?
But here’s what that actually means for investors: hesitation creates opportunity.
In fact, while Melbourne house prices fell 3.1% in the last quarter … regional Victoria was booming.
It was just as we predicted.
Bendigo house prices went up 12%.
And Geelong house prices rose 7.2%.
That’s not all. Our Locations report isn’t a full list of where we invest. It’s just a sample.
We also invested heavily in Ballarat where house prices surged 14.3%.
And we’ve been placing clients into Shepparton (9.1%), Warragul (7.2%) and other regional centres as well. Across the board, regional Victoria is up 8.0% over the past year.
In fact, every regional location we’ve helped clients invest in over the past 12 months has significantly outperformed the national average.
There’s No Such Thing As ‘The’ Property Market In Victoria
If you really want to invest successfully, you don’t look at house prices across the entire country.
There are multiple markets in Australia, often moving in opposite directions. And nobody’s reporting that part.
In fact, while the media is overwhelmingly negative about Victoria … there’s something you might not be aware of.
More People Moved To Victoria Than Any Other State Last Year
I know what you might be thinking.
Everyone’s saying Victoria’s a terrible place to live and invest in.
They all want to be in Queensland and New South Wales.
Oh really?
Did you know that in the last 12 months … more people moved to Victoria than any other state in Australia.
The population in Victoria increased by 117,300, while in NSW it was just 104,600 and Queensland’s population only grew by 92,200.
That growth is coming from overseas, not from people leaving other states. But here’s what matters: when a state is that attractive to the outside world, renters and buyers follow.
So forget what people are saying about Victoria. The facts tell a different story. House prices remain below their 2022 peak, and supply is still critically low.
Why does that matter?
When supply tightens, rental vacancy falls and rents rise. Tight supply also means less competition when you’re buying: fewer properties on the market means better negotiating position and a clearer path to positive cashflow.
If you’re an investor this is music to your ears.
Here’s Where It Gets Even More Interesting
We’re seeing a massive divide between capital cities and regional cities across Australia. In fact some of our favourite locations are large regional cities.
Regional cities in New South Wales and Queensland are presenting excellent opportunities for investors.
But as you can see by our results, Victoria is outperforming them by a significant margin.
Why Are Regional Victorian Cities Growing So Fast?
Affordability is the biggest reason. And timing matters.
Because of the current hesitation in the market, affordability has become the primary filter for serious investors.
When buyers are retreating from expensive capitals, it’s the accessible properties the ones regional Victoria offers. Where activity concentrates and cashflow works day one.
House prices in regional Victorian centres are far more affordable than in Melbourne.
In Melbourne, the median house price is around $936,000.
However, prices in regional centres are far lower.
Look at Ballarat. Median prices sit around $650,000. That’s 30% cheaper than Melbourne, and it’s within easy driving or train distance.
Geelong prices are almost 18% cheaper. And it’s even closer.
And Bendigo prices are 27% cheaper than Melbourne.
Why does this 30% difference matter? Lower entry prices mean lower deposits.
A lower deposit means you can enter the market sooner, with capital still available for your second and third properties. It’s the compounding effect: three properties built over time will always outperform one expensive property held alone.
That’s the math that changes wealth.
It’s not just their proximity to Melbourne either. These regional centres are economic powerhouses, driven partly by governments who want to push departments to regional centres, and by big employers who can tap into cheaper real estate and offer better lifestyle opportunities for their staff.
Geelong employs thousands at Cotton On Clothing as well as a thriving education sector. It’s also home to WorkSafe, The TAC and a booming high technology manufacturing centre.
Bendigo is home to a new Government precinct which will employ over 1,000 staff, plus Thales Australia who have secured a $1 billion + project for the defence force.
And Ballarat’s economy is underpinned by a strong education sector, plus food giants Mars, McCains and George Weston Foods as well as IBM.
Stable, diversified employment attracts renters and keeps vacancy rates low. Predictable income is what banks look at when lending for your next property. Economic diversity keeps your portfolio working day to day.
Affordable ‘First Home Owner’ Market Outpaces Them All
You can see it in the national numbers too.
In July prices nationally fell 0.7%. It’s the biggest monthly drop we’ve seen in almost four years.
But the fall isn’t happening evenly. It’s concentrated almost entirely at the top end of the market.
And over the last three months, the most expensive homes fell 3.2% in value.
But at the same, the most affordable homes went up 0.3%.
And it’s even more pronounced in Victoria.
Not only are these homes easier to buy, there are a few significant incentives here too.
One is the first home owner grant on new homes. That’s a $10,000 gift from the very start.
Then there’s hefty stamp duty discounts which are driving plenty of activity at this end of the market.
In Victoria there’s no stamp duty on properties up to $600,000, and very low stamp duty for houses which cost more.
This certainly makes it attractive for first home buyers to get into the market.
For example, if you’re a first home buyer of a $650,000 Ballarat house you’ll save another $22,714.
Then there’s the federal government’s 5% deposit scheme. This is letting more and more buyers get into the market sooner than they’d otherwise be able to.
And with rents continuing to soar, many renters are choosing to take advantage of these schemes and buy instead.
It’s why we’ve seen impressive house prices rising in affordable regional markets while prices fall at the upper end in Melbourne.
People Can’t Resist Regional Victoria
It’s true. Life in regional Victoria is amazing.
Life seems a bit slower, more laid back.
There’s less traffic too and it’s faster to get to work. Parking near work is usually cheaper too.
Then on the weekend you’re not stuck in a traffic jam trying to force your way into the next suburb.
Then depending on where you are you’ve got the beaches, the bushland, farms and wineries.
There’s as much fresh air as you could want.
And here’s the best part.
When you’re paying a smaller mortgage you’ve got more money left over to enjoy the sensational lifestyle in these incredible regional cities.
Less money going to your house means more money going to loving life. No wonder people want to live here.
Our investors love these regional centres in Victoria too.
And while growth is one of the most important reasons to invest in real estate, you also need good rental yields. This is because cashflow is the lifeblood of your portfolio.
Too little cashflow makes it hard to hold onto a property. You’re vulnerable to interest rate rises, maintenance bills and tenant turnover.
And the banks won’t lend you more money if your overall income, including rents, is too low.
Take a look at this chart below.
On the left you’ll see house prices in different areas. The gold lines are the areas we invest in currently, and the blue lines are the areas we aren’t.
Next, look at the chart on the right. This is gross rental yield. Again, we invest where the lines are gold and not where they’re blue.
You’ll see that the affordable areas we invest in enjoy much higher rental yields.
For example, Ballarat houses are around two thirds of the price of Melbourne house prices so they’re easier to get into.
And the rental yield in Ballarat is so much stronger at 4.2% compared to just 3.3% in Melbourne.
Since Melbourne house prices went down 3.1% in the last 12 months, you’re getting less rent for a house there which is going down in value.
On the other hand though, in regional cities you can get more properties, higher growth and higher rents than in the capitals.
3 Houses In Ballarat For The Price Of 2 In Melbourne
If you buy more affordable houses instead of less high-priced ones, you get a steadier cash flow.
After all, tenants come and tenants go. And even though houses in these markets aren’t vacant for long, there’s still a couple of weeks where you don’t get paid rent.
With more properties you still get money in even when one goes vacant. And this makes your cashflow more even and makes it easier to invest here.
It’s Hard To Get Ahead Without Property
There’s another good reason to target affordable areas like regional Victoria instead of major capitals.
The simple fact that entry prices are lower means … they’re easier markets to get into.
A 10% deposit on a Ballarat property is $65,000.
Yet a 10% deposit on a Melbourne property is over $93,000.
And if you’re on a typical household income of $120,000 to $130,000 it’s easier to get a loan for a Ballarat house with a 4.2% rental yield.
It’s much harder to get a loan for a costlier Melbourne house with a much lower 3.3% rental yield.
And if you can’t get into the market, you can’t make money from it.
Investors Are Being Forced Away From The Top End Of The Market.
Where Do You Think They’re Going?
Another factor driving house prices in regional centres are the changes to negative gearing and capital gains tax. These changes have affected the market, but not in a uniform way.
As you probably know, if you bought an existing property after 12 May 2026 (budget night), you can’t claim negative gearing on your tax return unless it was against positive income from other properties.
Unless of course it was for a brand new property in which cases nothing changed.
The CGT discount changed too, down from 50% to an inflation-linked model, with a new minimum 30% tax on capital gains from 1 July 2027.
The Banks Know What’s Going On, And They’ve Already Tightened Their Borrowing Calculations.
As a result, investors can’t borrow as much as they could before.
Without negative gearing they cost more to hold onto. And since rental yields go lower as prices go higher, expensive houses are less attractive.
As a result, investors who typically go after established properties at the top end of the market have struggled to make the numbers work.
And even if they can, it doesn’t make sense financially.
Instead, they’re redirecting their attention toward ‘affordable’ houses, specifically new and off-the-plan stock.
And it’s not just investors.
Interest rate increases have seen borrowing capacities drop across the board. And people are eyeing off more affordable houses with more affordable repayments.
This is another reason we’ve seen such strong demand for regional centres, especially in Victoria.
What Does This Mean For Investors?
There’s no doubt that house prices are softening.
Some capitals are falling faster than others. Some are still going up.
However, affordable regional areas are outperforming their city counterparts.
And while the affordable end isn’t immune to what’s going on, it’s definitely holding up far better than the headlines suggest.
Curious About What This Means For You?
You might be wondering whether you can take advantage of this information.
And what’s possible for you.
This is exactly what our Senior Property Wealth Planners can take you through.
We’ll map out what’s best for your situation, based on actual market data.
We’ll show you how you go from one property to the next, and keep going until you have enough to replace your income with rents.
We’ll show you the opportunities which are moving right now.
And answer any questions you have along the way.
There’s no obligation or pressure here.
All we want to do is make sure you know what’s possible for you and how it could work. And if you’re ready to move, we can help you do it strategically.