“February monthly property market report (January 2026 results)”
Here’s your property market wrap on the results from January 2026. We’ll cover home prices, rents, and what factors could affect sentiment across metropolitan Melbourne and Regional Victoria.
The headline numbers from the month of January
- Melbourne dwelling values rose +0.1% over the month and +5.4% over the year, with a median dwelling value of $830,371.
- Regional Victoria dwelling values rose +0.7% over the month and +7.1% over the year, with a median dwelling value of $623,467.
- National dwelling values rose +0.8% for the month and +9.4% over the year.
Metropolitan Melbourne
Melbourne still remains 0.7% below its prior peak from March 2022 whereas Regional Victoria is still 0.6% below its peak of May 2022.
Melbourne has edged back into positive monthly growth after a softer December, but the pace remains modest compared with several other capitals. The market momentum and resilient is in the lower-to-mid price points, where demand is deepest and where buyers are most likely to act when value appears.
The market is still being shaped by two forces:
- Supply constraints are supporting prices. Stock levels remain well below average, keeping competition active for well-presented homes, particularly those that align with mainstream budgets.
- Demand headwinds remain real. Affordability is stretched, cost-of-living pressures are still present, and rate expectations continue to influence confidence.
Across Greater Melbourne, the stronger Local Government Area’s (LGA’s) leading annual growth included:
- Frankston (median $856,746, +14.3% annually)
- Brimbank (median $730,805, +10.0%)
- Kingston (median $1,085,527, +8.8%)
This was followed by areas such as Whitehorse, Sunbury and Dandenong.
This supports a consistent theme: growth is often strongest where price points remain relatively accessible, and where amenity, infrastructure and lifestyle drivers continue to strengthen local demand.
Regional Victoria:
Regional Victoria has stronger momentum than Melbourne and outperformed Melbourne in January (+0.7% vs +0.1%). Leading regional growth areas over the year included:
- Mildura (median $549,192, +19.7%)
- Ballarat (median $631,682, +14.3%)
- Grampians (+13.5%)
- Loddon–Elmore (+13.0%)
- Bendigo also featured strongly (+12.1%).
Across the country, combined regional markets continued to run ahead of combined capital city markets, highlighting that many regional centres still have strong demand and comparatively better affordability.
Rentals and yields:
Rental conditions remain a major factor in the Victorian investment story,
- The national vacancy rate sits at 1.7%, still well below long-run norms.
- National rents rose +0.6% in January and +5.4% over the year.
- Melbourne’s gross yield is around 3.6% overall (houses around 3.1%, units around 4.8%).
What else is pertinent right now for Melbourne and Victoria
From 1 February 2026, lenders are operating under a debt-to-income framework designed to constrain very high leverage lending. This is unlikely to “switch off” demand, but it can reduce borrowing capacity for some buyers and investors
Although the 25 basis points interest rate increase announced on Tuesday 3rd February is of little surprise, further interest rate increases will remain a confidence driver, the expectation of “higher for longer” settings can influence buyer confidence, especially for highly leveraged borrowers. Melbourne’s modest growth rate is consistent with a market where buyers remain active, but are cautious and price-sensitive.
Victorian holding costs and compliance settings matter more than ever, Victoria’s property tax environment and vacant land/empty dwelling settings continue to be a key consideration for investors. While gross yields are quite good, net gross yields are deteriorating.
Policy watch: changes that could influence future investment
The ongoing national debate about housing affordability settings, including investor tax concessions such as negative gearing and the capital gains tax discount being reduced from 50% to only 25% will play out in the next 3 months. The Greens and Labour have already agreed and pending the “16 March Taxation Reform Report” recommending the discount, we are likely to see a May Budget with the change and then a vote in Parliament to approve it. The safest investment strategy in this environment is to focus on properties with strong fundamentals, amenity, scarcity, transport links, and broad owner-occupier appeal.
For the Victorian market specifically, first home buyers are likely to hear an announcement in 2026 that the stamp duty exemption will be increased. The exemption first introduced in 2017 hasn’t had a revision and the Labour government are likely to beat the Liberals to the market with an increase. Buyers should assume that governments will continue to look for levers that will increase affordability for owner-occupiers.
Remember, the information provided is of a general nature, always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.
- Free Sales Price Report: https://www.obrienrealestate.com.au/property-report/
- Free Rental Report: https://www.obrienrealestate.com.au/rental-report/
- View our Annual Axis Report: https://www.obrienrealestate.com.au/axis/
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