Property Investment Outlook October 2025

The Melbourne investment market has been through a torrid time over the past few years in the post-COVID environment. While high occupancy and rising rents are positives for investors, a number of other factors — namely high interest rates, vacancy levies, and land tax increases — have driven many investors away from Melbourne, redirecting their capital into other major cities.

However, sentiment is slowly turning, with many investors once again considering Melbourne as a place to put their money. Will spring prove to be a period where Melbourne finally gets back on the national investing map?

The Tide Turning for Melbourne as a Thriving Investor City
An REA article in September highlighted a survey by the Property Investment Professionals of Australia (PIPA), which revealed indicators that Melbourne may soon re-emerge as a key hotspot for property investment.

The survey showed that in August, Melbourne led the country for new investor sales, accounting for 22.1% of all sales — up from 18.4% in 2024. Brisbane (19.7%) and Perth (16.3%) rounded out the top three. Another notable finding was that 41% of respondents now view Melbourne as the best city in Australia to buy property, up from just 26.3% last year. Brisbane followed a distant second place at 16%.

According to PIPA, long-term capital growth was the number one reason for renewed investor optimism in Melbourne, followed by strong population growth and the enduring appeal of being a major capital city.

Extended Stamp Duty Concessions Could Reward Investors
The Victorian Government currently offers concessions on stamp duty for buyers of off-the-plan apartments. While these concessions were due to end in October 2025, they have been extended for investors who enter into a sales contract before October 20, 2026. The concession allows buyers to pay stamp duty on construction costs rather than the full purchase price — saving thousands of dollars.

“My headline for Melbourne is the return of value, and I think that is what’s enticing investors,” said Dr Nicola Powell, chief of research and economics at Domain, in an article in the Australian Financial Review in late September. “That’s actually the highest level of lending to investors we’ve seen since 2022,” she added.

Melbourne’s Investment Hotspots
With data from real estate analytics company PropTrack, the Herald Sun recently listed Melbourne’s best suburbs for landlords. Many of these suburbs are on the affordable side, putting investors in direct competition with first-home buyers. PropTrack analysed rental returns, rising property values, and the time taken to secure a new tenancy.

Meadow Heights in the city’s north topped the list, with an affordable $626,000 median house price and close proximity to Melbourne Airport as key advantages of the suburb. Nearby Craigieburn and Cranbourne South also ranked highly for house investment, while Moonee Ponds, South Yarra, Carlton, and Notting Hill stood out for unit investment.

“The brutal reality of the Victorian property market from the investor’s perspective over the past 12 months is that there haven’t been many opportunities to achieve a strong return on investment based on these metrics,” said Jacob Caine, Acting Chief Executive of the Real Estate Institute of Victoria (REIV), in the Herald Sun. “The silver lining is that Victoria is now poised for significant growth over the next 12 months.”

The Growing Rise of Rentvesting
With Melbourne property prices still at relatively affordable levels (perhaps not for long), many owner-occupiers are turning to rentvesting.

Once a niche strategy, rentvesting has quickly entered the mainstream. It involves buying a property as an investment (typically in a growth suburb) while renting in a lifestyle location of your choice. This strategy allows investors to access the market, benefit from capital growth, and still enjoy the lifestyle they want.

“I’ve met a few rentvestors who enjoy apartment living in dwellings that would otherwise be poor investments — often those with high strata fees and lifestyle extras such as gyms, pools, and concierge services,” said Cate Bakos in the Australian Property Investment Magazine earlier this year. “Rentvesting allows a certain freedom, and it can be a great option for those who prefer flexibility in their housing choices.”