Why the VIC Property Market is Trending for Investors in 2025
- kyle36034
- May 21
- 12 min read
Updated: Jun 5
The Victorian property market – especially Melbourne – is rapidly emerging as a prime opportunity for investors seeking long-term capital growth, affordability, and high rental yields . In 2025, a convergence of economic tailwinds, infrastructure projects, and policy incentives has positioned Victoria as a standout real estate investment destination. Investors are eyeing this market for its resilience and future upside.
Key factors behind this trend include:
Booming population growth and economy: Melbourne’s population is surging (projected to reach ~6.4 million by 2035 ), fueling housing demand amid a diversified economic base .
Major infrastructure upgrades: Massive transport projects (road and rail) across Victoria are improving connectivity and opening new growth corridors .
Policy incentives: Government measures like stamp duty concessions and anticipated interest rate cuts are lowering entry costs and boosting buyer confidence .
High-demand growth suburbs: Emerging suburbs on Melbourne’s fringe (e.g. Sunbury, Beveridge, Werribee) are seeing heightened buyer interest, price growth, and development activity .
Relative affordability: Melbourne offers lower entry prices than most other capitals (median ~$779,000 ), making it attractively priced relative to Sydney and others .
Below, we delve into each of these factors in detail and explain why 2025 is shaping up to be a favorable year for property investors in Victoria.
Economic and Population Growth Driving Demand
Victoria’s robust population growth and economic recovery are fundamental to its property market strength. Melbourne is Australia’s fastest-growing capital city in population terms, now forecasted to reach about 6.4 million residents by 2035, growing at ~1.5% annually . This sustained population influx – bolstered by revived overseas migration and students returning post-pandemic – is driving housing demand across the city and regional hubs. In growth areas like Beveridge (north of Melbourne), the population is anticipated to surge 16.2% over the next decade, topping 45,000 residents by 2034 . Such demographic trends underpin consistent buyer demand and rising property values , as new households form and seek housing.
Economically, Victoria’s diversified economy and thriving job market provide a solid foundation for property investment. The state benefits from industries ranging from finance and tech to education and health, which helped Melbourne remain a top long-term investment city . Real estate experts note that “Melbourne’s dynamic, vibrant economy – combined with one of the strongest population and GDP growth projections of any global city – is a huge driver of demand”, supporting optimism among investors . With unemployment low and migration surging (after the pandemic lull), vacancy rates are near historic lows in Melbourne’s rental market – a clear sign that housing supply is struggling to keep up with demand. This tight rental market means investors can enjoy high tenant demand and reliable rental yields in many areas.
In short, more people + more jobs = more housing needed. Population and economic growth are expanding the base of renters and buyers, creating a fertile ground for property value growth over the coming years.
Infrastructure and Development Updates in Victoria
Adding to the appeal, Victoria is in the midst of an infrastructure boom. The state government’s Big Build program is delivering over $100 billion in transport projects – an unprecedented construction wave that is reshaping connectivity across Melbourne and regional Victoria. Major initiatives include the new Metro Tunnel (with five new underground stations), the West Gate Tunnel freeway link, the North East Link motorway, removal of 110 level crossings, and the Melbourne Airport Rail link . Additionally, the ambitious Suburban Rail Loop has broken ground, aiming to connect outer suburbs by rail for the first time . These projects upgrade transport links, cut travel times, and open up new residential corridors, which in turn boosts the desirability and land values of areas benefiting from improved accessibility.
Importantly for investors, many growth suburbs are directly tied to these upgrades. For example, Beveridge in the north is slated for a future train station, improving its connectivity to Melbourne’s CBD . Sunbury, a north-west fringe suburb, is undergoing rail line and road upgrades as part of network improvements . Such enhancements are already spurring development: master-planned estates like Allam’s Alkyra in Beveridge and St Ronans in Sunbury are attracting buyers ahead of infrastructure delivery . Upcoming train stations, highways, and town centers signal strong future growth, as new residents flock to areas where commuting is becoming easier.
The Victorian government is also actively encouraging housing development alongside infrastructure. In the latest state budget, for instance, $24 million was allocated to plan 50 new “train and tram zone” activity centers – nodes for higher-density housing around major transport routes . Another $12.1 million will jumpstart planning for 13,200 new homes in outer suburban precincts (such as Clyde South in the south-east and Derrimut Fields in the west) . This alignment of transport and housing planning promises new supply in well-connected areas, creating opportunities for investors to buy into emerging communities with modern amenities.
All told, infrastructure investment acts as a catalyst: it creates jobs in the short term and adds long-term value to surrounding real estate. Investors who get in early in suburbs set to benefit from new train stations, highways or schools can ride the wave of capital growth that often follows. As one industry expert put it, “The combination of affordability and projected infrastructure projects makes (areas like) Beveridge a strategic investment location” . Improved roads and rail not only make life easier for residents, but also expand the city’s footprint, ensuring Melbourne’s growth is not constrained by transport bottlenecks. This is unlocking new investment frontiers across Victoria.
Policy Incentives: Stamp Duty Relief and Easing Rates
Investors in 2025 are also buoyed by supportive policy settings that make entering the Victorian market more attractive. A headline incentive is stamp duty concessions introduced by the state government. Since late 2024, Victoria has slashed stamp duty for off-the-plan purchases – and recently extended this relief for another 12 months, through October 2026 . Under this temporary concession, anyone who buys an eligible new apartment, townhouse or unit before the deadline pays dramatically reduced (often zero) stamp duty, as 100% of unfinished construction costs are deducted from the dutiable value . By removing price caps and investor restrictions, the scheme is open to all buyers, including investors, and has delivered average savings around $24,500 per purchaser so far . The Premier has framed it as both a housing affordability measure and a stimulus for construction, noting “we’re slashing stamp duty for off-the-plan units and townhouses – to build more homes and make them cheaper to buy” . For property investors, this is a golden opportunity to secure a new build with significantly lower upfront costs, boosting potential returns.
Beyond state incentives, the interest rate environment is turning favorable after a period of tightened monetary policy. The Reserve Bank of Australia’s rate hikes in 2022–2023 cooled the market, but by 2025 the cycle has shifted. Interest rates have stabilized and begun to ease, providing relief to borrowers. In fact, analysts at KPMG expect that interest rate cuts will commence by mid-2025, which should stimulate buyer activity and borrowing capacity in the second half of the year . Already, we’ve seen a pivot: one rate cut in early 2025 helped spark renewed sales momentum in Melbourne’s housing market . Prospective investors are regaining confidence as financing becomes a bit cheaper and more accessible, with many anticipating further rate reductions to come .
Lower interest rates directly improve investors’ cash flow (through lower mortgage payments) and can increase borrowing power, enabling investors to expand portfolios. Coupled with the tax advantages property investment already enjoys (like negative gearing and depreciation benefits), this easing monetary climate adds yet another incentive to dive into the market in 2025. The bottom line: policy winds are blowing in favor of investors, from state tax breaks to national monetary policy shifts, reducing the cost of buying and holding property in Victoria.
Suburb Trends: High-Demand Areas and Capital Growth Hotspots
Not all parts of Victoria are equal – but right now many key suburbs are heating up, offering particularly strong prospects for capital growth and rental returns. Investors are focusing on growth corridors at Melbourne’s fringe and select inner-city pockets where demand is outstripping supply:
Northern Growth Corridor: Beveridge – a once-rural township north of Melbourne – is emerging as a hotspot. It recorded a modest +0.9% rise in median house prices over the past 12 months and saw over 1,200 potential buyers viewing listings in a single month . With thousands of new homes planned (e.g. in the Alkyra estate) and a population boom underway, Beveridge is on the radar for its affordable entry prices and strong upside. As Allam Homes’ sales manager Adam Wellington observes, investor interest has surged in such high-growth areas, and new infrastructure is cementing “Beveridge (as) a strategic investment location” .
North-West Suburbs: Sunbury – a historic town now effectively an outer Melbourne suburb – has been singled out as Australia’s top suburb for price growth potential in 2025, according to Hotspotting’s Price Predictor Index . House sales in Sunbury have spiked (from ~140 to 250 per quarter over 2023–24 ), signalling burgeoning demand. Over the past year, Sunbury’s median house price inched up 0.8% despite broader market softness, and 5,692 buyers showed serious interest in the area . Local agents report that “sales have surged again since the interest rate cut” and expect upcoming rate reductions to drive even more activity . With a new rail tunnel soon improving Sunbury’s train service and plenty of amenities, this suburb exemplifies the “upgrader magnet” – families and renters migrating outwards in search of space and value, which in turn pushes prices higher.
Western Corridor: Suburbs like Werribee, Caroline Springs, Hoppers Crossing, and Deer Park in Melbourne’s west are also tipped for “supercharged” growth . These areas – traditionally more affordable “battler burbs” – have seen a renaissance as infrastructure (freeway upgrades, rail extensions) connects them better to the city. Werribee, for instance, offers median house prices in the low $600,000s and made Hotspotting’s list of top prospects . As buyer demand spills over from pricier inner regions, well-established suburbs with larger blocks and improving transport (like those in Wyndham and Melton regions) are attracting both investors and first-home buyers seeking value.
Inner-City and Middle-Ring: It’s not just the outskirts – selected inner areas are rebounding too. Apartments in inner-city locales such as Docklands, Richmond, Hawthorn East, and St Kilda are forecast for “supercharged” price gains in 2025 . These markets suffered during the pandemic (with investors shunning high-rise units), but conditions have shifted. International students and young professionals are returning, filling up rental apartments; vacancy rates in these suburbs have dropped sharply. With limited new apartment supply coming online (construction is still subdued post-COVID), even units in historically oversupplied areas are now set for growth as demand catches up . Terry Ryder notes that some long-flat unit markets like Docklands are likely to rise due to a mix of affordability and buyers seeking convenient, low-maintenance city lifestyles . Meanwhile, family-friendly middle-ring suburbs (think Glen Waverley, Reservoir, etc.) continue to see solid competition due to good schools and amenities – these blue-chip areas have enduring appeal for both renters and owner-occupiers, supporting steady capital gains.
Across Victoria, one common theme is strong buyer demand meeting limited housing supply. Many suburbs now have far more interested buyers than properties for sale, creating upward pressure on prices. The PropTrack data from early 2025 showed dozens of Melbourne suburbs with buyer demand at multi-year highs despite only slight recent price growth – a classic indicator that price rises may soon follow. In fact, Terry Ryder’s analysis found 63% of Melbourne suburbs are now on an upward trajectory, calling it “the beginning of a strong upward trend” after a long period of flatness . He highlights that Melbourne is “very attractively priced” relative to other cities now, and expects “in a year’s time, we should see Melbourne doing much better than recent years” . For investors, targeting the right suburb is key: those with new infrastructure, population growth, and tight supply are poised to deliver the best returns. Fortunately, Victoria has a rich spread of such opportunities in 2025 – from new estates on the fringe to rejuvenated urban pockets – making it an exciting hunting ground for the savvy investor.
Melbourne vs Other Major Cities: How Victoria Stacks Up
When comparing Australia’s big property markets, Melbourne stands out for its combination of scale, affordability, and growth potential. Despite being the second-largest city, Melbourne’s housing is more affordable than most other capitals. As of early 2025, Melbourne’s median dwelling price (~$779,000) ranks as the third least expensive among Australia’s capitals – cheaper than Sydney, Brisbane, Canberra, and Perth, with only Darwin and Hobart coming in lower . By contrast, Sydney’s median is well above $1.1 million. This price gap presents a clear advantage: investors can enter the Melbourne market at a lower cost but still enjoy the benefits of a major metropolitan economy. In other words, your dollar goes further in Melbourne, allowing investors to acquire higher-quality or better-located assets than the same budget would buy in Sydney.
Melbourne’s relative affordability also contributes to higher rental yields in many cases. With property prices more reasonable and rents rising amid strong demand, rental returns in Melbourne can be very attractive compared to the yield compression seen in Sydney’s priciest suburbs. Furthermore, Victoria’s market resilience has been notable. Even during recent downturns, Melbourne saw milder price corrections than Sydney’s volatility, and it’s now rebounding from a lower base. The long-term growth trajectory for Melbourne is strong: historically, it has matched or exceeded Sydney’s pace over multi-decade periods, thanks to continuous population inflows and land availability for expansion.
In terms of 2025 outlook, forecasts place Melbourne near the top of the pack. KPMG’s latest Property Outlook expects Melbourne house values to rise about 3.5% in 2025, slightly outpacing Sydney’s ~3.3% growth, and to accelerate further to ~6% in 2026 . For units, Melbourne is projected around 4.7% growth in 2025 (on par with other capitals) and a nation-leading ~7.1% in 2026 as apartment demand returns. Another analysis by Hotspotting ranks Melbourne as the third best-positioned region in Australia for property value growth in the coming year (trailing only the much smaller markets of Darwin and regional SA) . This is a remarkable vote of confidence in Melbourne’s broad-based recovery, considering it lagged during COVID-19 while smaller cities boomed. Now the pendulum is swinging back: pent-up demand is being unleashed in Melbourne, just as other markets are cooling from their peaks.
Finally, Melbourne benefits from a diverse investor base. Domestic and international investors alike are drawn to its stable rental market, renowned livability, and huge student population. Even with some recent tax changes for foreign buyers, overseas investors poured nearly $880 million into Victoria in the first three quarters of 2024 – attracted by comparatively lower prices and high-quality assets . Sydney often steals the headlines, but Melbourne quietly offers a balanced proposition of growth and yield that is difficult to find elsewhere at this scale.
In summary, compared to other major Australian cities in 2025, Melbourne/Victoria offers a “sweet spot”: big-city advantages without the extreme price tag, plus a unique phase of growth as it catches up from a slower period. For an investor deciding where to allocate capital, that makes Victoria a very compelling choice this year.
Capitalizing on Victoria’s 2025 Upswing
All signs indicate that Victoria’s property market is on a notable upswing in 2025. A thriving economy and surging population are providing fundamental demand. Massive infrastructure investments are unlocking new growth areas and adding value to existing ones. Government incentives and lower financing costs are creating a supportive environment for buyers. And numerous suburbs – from greenfield estates to rejuvenated inner districts – are demonstrating real momentum in both buyer activity and price growth. This unique alignment of factors is why seasoned property observers see Victoria (and Melbourne in particular) as a prime target for investors right now.
Of course, no market is without its nuances. It’s important to research which locations best fit your strategy – not every suburb will perform equally, and property selection remains critical. However, the overall landscape in Victoria favors a savvy, long-term approach. The market is still recovering to previous peaks in some segments, suggesting there is room to grow before hitting affordability ceilings. As one analyst noted, Melbourne’s recent stagnation means current prices are attractively priced relative to other cities, and the city is poised for a “strong upward trend” ahead . In other words, 2025 presents a window of opportunity: those who plan and act now stand to benefit as the upswing gains traction in the years to come.
For investors looking to capitalize, now is the time to do your homework and potentially make a move in the Victorian market. Consider reaching out to local real estate experts, exploring high-growth suburbs, and getting your finances in order to take advantage of incentives. The combination of factors at play in Victoria is rare and promising. Whether you’re a first-time investor or expanding your portfolio, 2025 could be an ideal moment to invest in Melbourne and greater Victoria – before the rest of the market catches up and competition intensifies.
Disclaimer
This article is for general informational purposes only and does not constitute financial or investment advice. Property investment comes with risks and individual circumstances vary. Before making any investment decisions, you should conduct thorough research and consider seeking independent professional advice to ensure any property purchase aligns with your goals and financial situation.
References
Realestate.com.au News – “Why the Victorian market is trending for investors in 2025”, 17 Apr 2025 .
Realestate.com.au News – “‘A huge win’: Victoria extends stamp duty relief”, 14 May 2025 .
KPMG Australia – “House prices to rise by 3.3%, units by 4.6% in 2025” (Residential Property Market Outlook), 28 Jan 2025 .
Realestate.com.au News – “Melbourne’s ‘supercharged’ suburbs for 2025 revealed: Hotspotting Price Predictor Index”, 3 May 2025 .
PropertyUpdate – “Melbourne property market forecast for 2025” (Michael Yardney), 19 May 2025 .
Victoria’s Big Build – About the Big Build (Vic Govt), accessed 2025 .
JLL Insights – “Why Melbourne’s prospects are tantalising for investors”, 15 Nov 2024 .
