Melbourne’s property investment market is entering a renewed phase of confidence and opportunity. Supported by persistently low vacancy rates, steady rental demand, and tightening supply, the fundamentals continue to favour investors - particularly those seeking long-term growth.
For investors chasing stability and future upside, Melbourne is once again shaping up as a market worth watching closely.
Interest piques in Melbourne as an investment hub
Melbourne’s decline in median house and unit prices over recent years has transformed the city into one of Australia’s best-value opportunities for property investors. A Herald Sun article from March highlighted data from property advisory firm Oliver Hume, suggesting transaction volumes could rise by as much as 20 per cent over the next year as both new and seasoned investors pursue value across the city.
“Melbourne’s been in the doldrums for two or three years now, sitting at 15-year lows in terms of transaction volumes, but demand and pricing are improving,” said Matt Bell, Chief Economist at Oliver Hume to the Herald Sun. “We’re confident the fundamentals underlying Melbourne are strong, with elevated pent-up demand.”
Buyer’s agent and chair of the Property Investment Professionals of Australia (PIPA), Cate Bakos, also pointed to growing investor interest. “There’s no doubt Melbourne currently represents strong value in the national property landscape,” she said. “In fact, over the past year I’ve received more interstate enquiries than I had in several years prior.”
Low vacancy rates prove a positive for investors
Vacancy rates across Australia are sitting below 2%, with Melbourne currently recording figures between 1.6% and 1.8%. This tight rental market has been driven by a number of factors including strong population growth and the return of international students.
According to reporting from the Australian Associated Press (AAP), investor lending has surged 64% from the lows seen in 2023. “On top of that, home prices have continued to rise, meaning that the share of investor sales recording a profit has been the highest in at least a decade,” said Angus Moore, senior economist at REA Group.
While Melbourne’s price growth has trailed cities like Adelaide and Brisbane, investor enquiries have steadily increased throughout 2025 and into 2026. Although low vacancy rates can make it more challenging for renters, they present a clear advantage for investors, supporting strong rental returns.
Melbourne’s top investment hotspots revealed
A notable trend emerging from recent reporting in the Australian Property Investor magazine is the strength of family-oriented suburbs when it comes to property investment in Melbourne
Established areas - where long-term owners are less likely to sell during downturns - dominate the list of top investment picks across greater Melbourne. Suburbs around Frankston in the city’s south feature prominently, including Seaford, Langwarrin, Sandhurst, and Cranbourne North. Other areas highlighted include Boronia, Greenvale, and Taylors Lakes.
“Melbourne is emerging as my top pick for the city likely to move towards the strongest market, based on its relative value and leading population growth,” said Steve Douglas, Executive Chairman of SMATS Group. “Melbourne offers buyers the best value and opportunity among the capital cities - particularly when purchasing quality housing stock.”
Melbourne a standout for long-term investors
A recent article in the Australian Financial Review places Melbourne near the top of the capital city rankings for long-term property investment. While recent growth has lagged behind other cities, the city’s underlying economic strength - combined with major infrastructure projects such as the Metro Tunnel and Suburban Rail Loop - signals strong long-term potential.
“I like Melbourne for the very long term - 10 to 15 years,” said Ben Kingsley, President of the Property Investment Council of Victoria. “The current market is not representative of the economic engine that is Melbourne.”
The report also noted that while investor activity has been somewhat subdued, this has not significantly driven rental growth. “There’s no real evidence in Victoria or Melbourne that reduced investment activity has caused a blowout in rental growth,” said Tim Lawless, Research Director at Cotality. “In fact, rental outcomes have been relatively moderate despite lower investor participation.”
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