Victorian Q1 market update: Strong fundamentals underpin performance
Teleisha Thomas
April 2026Written by Eliza Owen, Housing Market Analyst
Australia’s housing market enters 2026 with more underlying strength than the headlines suggest. Households are carrying low levels of mortgage stress, savings buffers remain healthy after the pandemic and 2025’s rate cuts, and years of conservative lending have kept non-performing loans below 1% nationally. These fundamentals continue to anchor the market, helping prices hold broadly steady even as some owners choose to wait for clearer conditions. For those considering a move, lower stock levels and reduced competition can actually work in their favour.
At the same time, global volatility has reshaped the outlook, with conflict in the Middle East and a spike in fuel prices adding fresh uncertainty. The Reserve Bank’s back-to-back rate hikes in February and March have lifted the average new variable mortgage rate to around 6.0% for owner occupiers and 6.3% for investors, and many economists expect another rise in May. In the short term, this will naturally cool buyer demand as borrowing capacity tightens, economic growth slows, consumer sentiment falls and households adjust. However, this also means an extension in the ‘buying window’ for the Victorian market, which continues to stand out as having exceptional value.
Steady conditions and genuine opportunities
For Victoria, the picture is remarkably stable, and increasingly attractive for both buyers and sellers. Melbourne home values slipped just 0.2% in the March quarter, while regional Victoria rose 0.6%. Jellis Craig’s own results reflect this steady demand, with 2,089 sales recorded and an average of 5.9 groups per open home.
March at a glance
Melbourne’s unit market was a quiet standout, rising 0.1% in the March quarter to a median of $644,000. Importantly, Melbourne now has the highest unit rental yield of the state capitals at 4.9%, up from 4.8% a year ago. This presents a compelling combination of affordability and income potential for investors.
This presents a compelling combination of affordability and income potential for investors.
House values in Melbourne softened slightly, down 0.9% to a median of $983,000. For buyers, this presents a rare window: first home buyers and upsizers can secure more space and better value while competition remains manageable. Sales activity is still strong, with Cotality reporting 12,568 house sales across Melbourne in the March quarter. This is the highest of any capital city and 26.3% higher than Sydney, indicating comparatively resilient buyer confidence. Therefore, sellers should also enter the market with some confidence that the first home buyer and upsizer cohort are still active.
In regional Victoria, momentum was even stronger. House values rose 1.6% to $666,000, while units lifted 0.8% to $454,000. Sales volumes were robust, with around 8,600 transactions, up 17.0% on the March quarter of 2025. This momentum was mirrored across the Jellis Craig regional offices, which recorded a 22.6% increase in transactions year-on-year.
Strong fundamentals underpin the outlook
Victoria’s underlying drivers continue to improve. Net interstate migration turned positive in the year to September 2025 for the first time since early 2020, and net overseas migration reached around 89,000 (slightly above pre COVID averages and a key support for rental demand). The labour market remains resilient, with unemployment at 4.7% and job numbers up 1.8% over the year.
Lending activity also finished 2025 on a strong note. New housing loans rose 12.5% across Victoria, with first-home buyer loans up 12.7%. This was likely boosted by the expanded 5% Deposit Scheme. Investor lending also surged 12.3%, reaching a new series high of 15,700 loans.
Taken together, the data suggests that while 2026 will not be without challenges, Victoria’s housing market is far from fragile. Strong population growth, tight supply, and resilient household finances continue to provide a meaningful buffer against global uncertainty.
For buyers, the Victorian property market is rich with sound value opportunities and relatively strong rent yields. For sellers, while higher interest rates may require some adjustment to price expectations, well executed campaigns are still delivering strong results in a market with steady demand and limited stock.
Data insights powered by Cotality and Jellis Craig.
Eliza Owen is a leading housing market commentator with more than a decade of experience analysing property market trends. Formerly Head of Research at Cotality, she offers an informed perspective shaped by year-on-year market shifts.
