Three of the property industry’s leading voices share their thoughts on what the next 12 months and beyond hold for Victoria’s residential housing market.
What does the economic landscape look like over the next 12 months?
Andrew: We’re expecting a productive property market in Melbourne and Victoria. While we’ve had headwinds, including interest rate increases and global conflict, undersupply and population growth suggest those investing in property will be rewarded.
Eliza: Unexpected capital pressure in the Australian economy and events in the Middle East suggest the potential for stagnation. But for well-capitalised buyers, this will extend a window of opportunity, particularly in Melbourne.
What role will interest rates play?
Richard: Anticipated additional rate rises may have an impact across Sydney, Brisbane, Adelaide and Perth. Melbourne, however, with its large greenfield market and more affordable product, remains undervalued.
Andrew: Anyone in the market now has priced in another one or two moves in the rate cycle. Active buyers will press on, but we may see reduced depth of demand as the year progresses.
The Cotality Home Index shows regional Victoria continues to perform well relative to metropolitan Melbourne, with Geelong and Ballarat standing out.
How will global instability shape the property and construction sectors?
Eliza: Australia is entering this period of global turmoil on very strong footing. The housing market is underpinned by strong financial pillars, and from a demand perspective, the market should remain stable.
Richard: Overseas investors see Australia as extremely attractive. The challenge is around construction and the cost of materials, which is having an impact on housing prices. This is more pronounced in apartments than greenfield projects.
Are planning reforms delivering on their promise?
Andrew: The planning changes are positive overall, although we’re not yet seeing them reflected in construction feasibility. It will take some time before we see big shifts in the market.
Richard: Planning reforms are being well received by the industry because they provide certainty. Reforms are sending the right signals to the finance and building industry that the state is open for development.
How are rental reforms and tax settings influencing investor activity?
Eliza: The investor market rebounded strongly in the second half of 2025. Despite higher taxes and rental reforms, Melbourne is undervalued and offers good rental yield growth.
Richard: As prices in Sydney and Brisbane continue to increase, Melbourne remains compelling - particularly in the apartment space. There is potential for both capital growth and rental yield in the right location.
What is the outlook for the premium end of the property market?
Andrew: The premium property market is generally less impacted by interest rates. Transaction time has increased, but supply is shrinking, and while there’s a shortage, it will remain a productive segment of the marketplace - though we’re not forecasting significant short-term capital growth.
How will regional markets perform relative to Melbourne?
Eliza: The Cotality Home Index shows regional Victoria continues to perform well relative to metropolitan Melbourne, with Geelong and Ballarat standing out. These markets remain relatively affordable, supported by strong demographic appeal and solid long-term growth potential.
Andrew: In times of economic uncertainty, people look for more affordable options, and regional areas benefit - particularly places like Geelong, Central Victoria and the Mornington Peninsula.
What role will international buyers play?
Andrew: Given migration data and global instability, international buyers will continue to drive our market forward through rental demand.
Eliza: During the GFC, we saw a spike in overseas migration to Australia. People come to Australia for relative stability, and I can see the same dynamics supporting demand in the near future.