Victoria's Property Hotspots: Where to Invest in 2026
- Alpha Real Property Group
- Nov 18, 2025
- 6 min read
Victoria's property market is poised for a remarkable transformation in 2026. After years of underperformance relative to other Australian capitals, the state is emerging as the unexpected star of the national property landscape. KPMG's forecasts position Melbourne as the best-performing capital city in 2026, with house prices projected to rise 6.6% and unit prices by 7.1%—outpacing every other major Australian city.
"Property investment isn't about chasing yesterday's winners—it's about positioning yourself ahead of tomorrow's fundamentals," says Paul Virdi, Director of Alpha Real Property Group. "Victoria's 2026 outlook presents the kind of contrarian opportunity that separates strategic investors from the crowd."
Understanding Victoria's Property Hotspots for 2026
The Victorian market sits at a compelling inflection point. After Melbourne's median house price remained under the million-dollar threshold at $953,000—whilst Sydney surpassed $1.5 million—the value proposition has become undeniable. Between January 2025 and December 2026, approximately $111,427 is forecast to be added to Melbourne's median house value, whilst units should see $66,545 in growth.
Regional Victoria is simultaneously awakening from its slumber. Victoria has secured three cities in the latest Hotspotting Top 10 National Best Buys report—more than any other state, signalling a broad-based recovery across metropolitan and regional markets.
Victoria's Property Hotspots: The Melbourne's 2026 Advantage
Why Melbourne Leads the Nation in 2026
Melbourne's resurgence follows a prolonged downturn from 2022, with growth now supported by relatively lower house prices compared to other capitals and solid demand as a key destination for overseas arrivals. The city's rental market remains exceptionally tight, with vacancy rates creating strong income security for investors.
Key Growth Drivers:
From 1 January 2026, virtually all first home buyers can enter the market with just a 5% deposit via taxpayer-backed guarantees, dramatically expanding buyer pools and competition for entry-level properties.
Victoria's Big Build program is delivering over $100 billion in transport projects, including the Metro Tunnel, West Gate Tunnel, North East Link, 110 level crossing removals, and Melbourne Airport Rail link. These infrastructure investments are reshaping property values along new transport corridors.
Melbourne apartment delivery is expected to average 9,000 per annum over 2025-30, nearly 25% below Sydney, whilst demand for housing stock is expected to average 38,000 units per annum over the next five years. This supply-demand imbalance creates upward price pressure.
Victoria's Property Hotspots: Specific Suburbs for 2026
Frankston continues its impressive trajectory. Frankston ranks in Hotspotting's Top 10 National Best Buys, with strong uplift in sales activity and positioning for long-term growth. The median value of $813,941 represents excellent value considering the suburb's hospital redevelopment and transport links.
Casey and Hume feature amongst Melbourne's strongest markets, driven by affordability, offering investors entry points well below the metropolitan median with strong rental demand from families.
Melbourne's Unit Sector presents an exceptional opportunity. Unit price growth is projected to double from 3.6% in 2025 to 7.1% in 2026, outpacing house price growth as affordability pressures drive demand towards attached dwellings.
Yarra has secured a spot in the national top 10 rankings, forecast for long-term growth and attractive investment opportunities, appealing to professionals and downsizers seeking an inner-city lifestyle.
Regional Victoria's Property Hotspots: The 2026 Awakening
Regional Victoria's revival represents one of 2026's most compelling investment narratives. After lagging behind other regional markets during the pandemic boom, these centres are now positioned for sustained growth.
Greater Geelong: The Infrastructure Powerhouse
Greater Geelong ranks in Victoria's top three investment locations and the national top 10, with a strong economy, infrastructure growth, and attractive opportunities. The city's economic fundamentals are exceptional:
Geelong generates over $20 billion in gross regional product, contributing 3.5% to Victoria's total state output, supporting nearly 300,000 residents. This economic base rivals many smaller capital cities.
Infrastructure investment includes a $294 million convention and exhibition centre in the CBD, Avalon Airport expansion, Deakin University growth, and the Geelong Fast Rail project, reducing commute times to Melbourne to just 50 minutes.
Geelong received $5.5 billion in recent infrastructure expenditure, with a projected $17.4 billion in major investments to come, fueling job creation and housing demand. The city's urban expansion plan will accommodate 110,000 new residents and create 35,000 jobs by 2050.
Investment Sweet Spots: North Geelong and Grovedale offer renovation-ready homes where investors can manufacture equity ahead of broader market appreciation.
Bendigo and Ballarat: The Growth Revival
Bendigo and Ballarat lead regional Victoria's revival with accessible home prices and strong buyer activity. These established regional centres benefit from excellent Melbourne connectivity whilst offering significant affordability advantages.
Both cities feature diversified economies anchored by education, healthcare, and government services, creating stable rental demand. Their historic architecture and lifestyle appeal attract tree-changers and retirees, supporting long-term population growth.
Shepparton: The Agricultural Hub
Shepparton ranks amongst the strongest regional Victorian markets for 2026, benefiting from its position as Victoria's agricultural and food processing centre. The region's economic resilience provides investment stability.
Comparing Victoria's Property Hotspots: The 2026 Numbers
Understanding the data behind Victoria's hotspots reveals clear patterns for strategic investment:
Forecast Capital Growth for 2026:
Melbourne houses: +6.6%
Melbourne units: +7.1%
Greater Geelong: Strong growth positioning
Bendigo/Ballarat: Revival momentum
Frankston: Top 10 national ranking
Value Comparisons:
Melbourne median house: $953,000 (vs Sydney $1.5M+)
Sydney premium: Approximately 70% above Melbourne
Price gap: Over $600,000 difference
Regional Victoria houses: $610,000 median
Regional Victoria units: $425,000 median
Rental Market Strength:
Melbourne vacancy rate: 1.8%
Exceptionally tight rental conditions
Median apartment rents projected to grow 24% between 2025 and 2030 across Australian capital cities
Regional Victoria gross yields: Houses 3.7%, units 4.5%
Why 2026 is Victoria's Year for Property Hotspots
Several converging factors make 2026 Victoria's breakthrough year:
Relative Affordability Creates Pent-Up Demand - Melbourne dwelling values are up just 17.5% over five years compared to the national average of 46.8%. This underperformance has created substantial "built-in equity" that's now being unlocked.
Policy Tailwinds Accelerate Growth - The January 2026 rollout of 5% deposit schemes with no income cap or volume limits will dramatically increase first home buyer participation, particularly benefiting entry-level properties and units.
Infrastructure Investment Reshapes Values - The unprecedented Big Build program is creating new property hotspots along transport corridors. Properties within 2km of major infrastructure projects typically appreciate 15-20% faster than comparable properties further away.
Supply Constraints Meet Rising Demand - Net overseas migration to Australia will remain strong in 2026, with the influx of immigrants driving rental growth as 62% of migrants don't own homes after five years. Combined with below-demand construction levels, this creates sustained upward price pressure.
Interest Rate Environment Favours Growth - KPMG expects 2026 to see balanced growth nationally as lower interest rates, improved supply, and normalised population growth support market stability. Historical data shows property prices typically rise 10-15% in the two years following rate cuts.
Strategic Considerations for Victoria's Property Hotspots in 2026
Successful investment requires looking beyond headline growth forecasts:
Tax Considerations
Victoria's land tax regime remains the highest in Australia. Investment property taxes include a lowered threshold from $300,000 to $50,000, flat land tax increases up to $975, vacant residential land tax, and short stay levies. Factor these ongoing costs into cash flow projections.
Market Selection: Metropolitan vs Regional
Metropolitan Melbourne offers stronger capital appreciation potential—particularly units—whilst regional centres like Geelong provide superior rental yields and lifestyle migration tailwinds. Diversification across both markets can balance growth and income objectives.
Unit vs House Strategy
Affordability pressures are driving buyer demand toward attached dwellings, with units, townhouses, and apartments offering more accessible entry points. 2026 forecasts show units outperforming houses across Victoria, making them particularly attractive for capital growth investors.
Infrastructure Proximity
Target properties benefiting from Big Build projects. The Metro Tunnel, Suburban Rail Loop, and regional fast rail connections are creating new property hotspots that will appreciate faster than established areas.
First Home Buyer Competition
With access to the unlimited 5% deposit scheme from January 2026, entry-level properties under $650,000 in metropolitan areas and $500,000 in regional centres will face intensified competition. Position yourself ahead of this demand surge.
The 2026 Outlook: Positioning for Victoria's Property Hotspots
Melbourne is forecast to be the top-performing city for dwelling price growth in 2026, with the most optimistic outlook amongst major accounting firms. This represents a dramatic reversal from recent years when Melbourne lagged national trends.
Recent buyer activity data in regional Victoria shows a big leap in sales volumes—often a precursor to future price growth—combined with very low vacancy rates and rising rents.
Experts characterise this as the beginning of a new property super-cycle—not a boom, but a period of prolonged property price growth. Victoria is uniquely positioned to lead this cycle.
For investors willing to move counter-cyclically, Victoria's property hotspots offer the decade's most compelling risk-reward proposition. The combination of relative affordability, infrastructure investment, policy support, supply constraints, and recovering buyer confidence creates a foundation for sustained outperformance.
The critical insight is timing. Melbourne has posted four consecutive months of home price growth, representing a notable turnaround, with prices still below peak levels. This creates the optimal entry point: momentum confirmed, but appreciation runway remaining.
Strategic investors in Victoria's property hotspots throughout 2026 will likely look back in 2030 and recognise this period as the turning point—when Melbourne and regional Victoria transitioned from underperformers to market leaders. The question isn't whether Victoria will deliver; it's whether you'll position yourself to benefit before the opportunity passes.
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