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Property prices have jumped in regional Victoria, defying Melbourne’s slowdown as home buyers and investors search for more affordable options.
The typical regional Victorian house costs $60,000 more than a year ago, reaching $640,000 in the March quarter, the latest Domain House Price Report, released on Thursday, shows.
Some of the steepest price rises were in far-flung regional centres, attracting investor interest for their lower prices and solid rental yields. The areas where prices fell included towns closer to Melbourne.
Horsham, more than three hours’ drive west of Melbourne, recorded the sharpest jump, up 19.4 per cent in the year to March. Even after the increase, the median house price there is less than half Melbourne’s, at $483,500.
Mildura was next, up 18.8 per cent to a median $570,000, followed by the Latrobe City Council area, which includes Traralgon, Morwell and Moe. It rose a combined 18.5 per cent to $499,000.
Domain chief of research and economics Dr Nicola Powell said price growth had accelerated in regional Victoria over last year and into 2026.
“Regional Victoria is really seeing consistent growth. It’s not seeing the slowdown that Melbourne is seeing,” she said, after Melbourne’s median house price fell 0.6 per cent over the March quarter.
“The LGAs that are leading price growth seem to be those more affordable ones.”
Powell said regional areas offered better housing affordability for first home buyers, and probably stronger yields for property investors than in Melbourne.
Harcourts Horsham principal Mark Clyne described his market as “very buoyant” and said homes under $600,000 had been attracting interest from investors in Melbourne and Sydney. He noticed buyer’s agents getting in touch for the first time about six months ago.
“If we put a property on the market that’s in the $400,000 bracket, it will be nothing to have 15 offers within a few days,” he said.
“Investors coming out of the cities, they’re not inspecting the property, they’re relying on our photos to assess the property, and they engage a building inspection, a pest inspection.”
Clyne said the area was benefiting from a range of investments: three mineral sands mining projects are likely to commence and a $300 million potato chip factory has been approved that is expected to employ 250 people.
He has also noticed tree-changers arriving.
“It goes in waves,” he said. “Certainly after COVID, we had a huge wave of people, and we’re just starting to see a little bit of a wave again as cost of living is probably biting a few [people].”
Ray White Mildura managing director Damian Portaro said the jump in Mildura’s median house price had been driven by the investment market, between $300,000 and $630,000.
“Once you get to about $700,000-plus, the market is completely normal and stable,” he said.
He sold a unit in January last year for $235,000 that resold, without renovation, a year later for $330,000, a gain of 40 per cent.
Other homes fetching about $450,000 after lockdown were now trading for about $600,000, Portaro said.
“In October 2024, I sold my first property to a buyer’s agent, and in October 2025, we had 180 on our books,” he said.
“It went crazy. This was the level of demand: each investment property was getting 10, 20, 30 offers per property, selling in a matter of days.
“Most of the offers we receive are sight-unseen buyers.”
Elsewhere, Powell said some premium locations were struggling, such as the Surf Coast, which outperformed in lockdown years, then pulled back.
The Surf Coast shire’s median house price fell1.6 per cent over the past year but remained Victoria’s highest outside Melbourne, at $1.22 million. The Murrindindi shire, including Marysville and Kinglake, fell 4.8 per cent, while the Mount Alexander shire, which includes Castlemaine, slipped 2.7 per cent.
“What unites most of these markets that are weaker is they’re highly exposed to discretionary buyers pulling back,” Powell said, noting the increase in Victorian land tax on secondary properties.
KPMG urban economist Terry Rawnsley said some regional centres offered more affordable housing than Melbourne, and also job opportunities.
“Places like Horsham and Mildura, they’ve got pretty well established agricultural sectors,” he said. “The climate’s been pretty kind to that sector over the last 12 or 18 months, so there will be money in the pockets of the farmers. They will be spending money on retail, etc.
“But also probably a big ageing population, which means there will be jobs for aged care workers, nurses.”
But local buyers might end up spending more of their income on their mortgage than previously, he said, and some could be priced out.
Not enough new homes were being built, he said.
“A lot of these communities have been caught unawares by this big surge in demand, and they’re scrambling to find the land, the infrastructure, the tradies, the materials to build.”
