House prices in Victoria’s regions ballooned 6.7 per cent in the past year, despite the Melbourne property market languishing after successive rate hikes and legislative changes.
The Glenelg local government area (LGA) in the state’s west rose most, jumping by over a quarter in just 12 months, while neighbouring Ararat, as well as Gannawarra, Northern Grampians and Latrobe all increased more than 15 per cent over the same period, Domain’s House Price Report for the September quarter reveals.
Domain senior residential economist David Cannington said the growth in the median house price for Victoria’s regions, which hit a record $640,000 in the September quarter, showed house prices outside the Melbourne market were proving more resilient in the downturn.
“The regions are still being impacted by higher mortgage rates, by the high cost of living, particularly fuel prices, and the changes to housing investment tax policy settings,” he said.
“But I think what’s offsetting that is … employment opportunities, and also the impact of the relative affordability of some regional markets, particularly in the major regional centres.”
Terry Rawnsley, KPMG’s director of planning and infrastructure economics, agreed.
“Even though prices are coming off the boil a bit in Melbourne, they’re still pretty high for first home buyers to get into the market,” he said.
In comparison, house prices are less than half the $1.01 million Melbourne median in places like Glenelg or Ararat, he said, which was pushing people to move further out.
“Living in the regions is also maybe a bit more cool and acceptable than it was pre-COVID,” he said, pointing to the opportunities for remote and trade work, as well as a growing cafe and hospitality culture in regional areas.
Glenelg Shire, which had the highest median house price growth over the past year, is dominated by house sales in Portland.
A1 Real Estate Solutions Portland agent Boyd Falconer said while there was demand from owner-occupiers in the area, the majority of inquiries he saw were from interstate investors, often through buyer’s agents.
The shipping and renewable energy hub also had the highest growth in asking rents of all Victorian LGAs in the September quarter, on Domain data.
“I listed a property the other day, and all but one of five inquiries I’ve had are from buyer’s agents or direct investors,” Falconer said, noting that investors seemed to be looking to snap up ready-to-rent houses – sight unseen – that would offset negative gearing and capital gains impacts without the need to renovate.
Hudson Portland agent Nikki Hudson agreed, saying there’d been “a lot of interest” in properties under $600,000 in recent months.
“We’ve got a deluge of buyers,” she said. “We just don’t have the listings ... which is forcing prices up.”
As a seaside town with a growing tourism market, Portland’s cheap house prices helped to attract investors to buy “just that little bit further from Melbourne”, she said.
An increasing number of interstate investors were also pushing up prices in Ararat, where the median house price rose almost 18 per cent to $442,000 in the September quarter, Ararat Ballarat Real Estate agent Aidan Moar said.
“You’re still able to purchase a brand new or five-year-old home in really good order,” he said, for around $500,000.
“And [investors] are getting a relatively strong rental yield for that.”
He thought legislative changes in August, which limited how self-managed super funds could borrow to purchase investment properties, had also driven an influx of investors over the past quarter.
“Whilst our median house price has increased [18 per cent] over the last 12 months, it’s still very affordable to buy a first home, investment, or a forever home in the area,” he said.
Rawnsley said there was a ripple effect caused by rising house prices in hubs like Bendigo and Ballarat, forcing more people to look to smaller centres like Ararat, pushing house prices locally up as they fell nationally.
“Because a lot of these places were [historically] the cheaper ones, they’re the last boats to rise on the tide,” he said.
Mansfield, in Victoria’s north-east and home to its namesake and skiing destinations like Mount Buller and Mount Sterling, was one of the few areas where the median house price fell over the past year – down over $75,000 in the September quarter, to $675,000.
Ray White Mansfield agent Toni Maynes said the last year had been dominated by holiday home and Airbnb sales, while those in more expensive owner-occupied homes seemed to be holding off in the downturn – the agency has sold just 46 properties in the area this year, compared to 153 in 2025.
She expected an uptick in the median price in the December quarter, as November and December were generally busier months for Mansfield.
“We’re usually about three months behind Melbourne – people sell down there [in spring], then they tend to buy up here,” she said.
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