Best areas in Victoria for property investment 2024

Thinking of investing in the regional Victoria property market in 2024?

While regional Victoria housing prices took a hit in 2023, some suburbs outperformed others, making gains in an otherwise cooler market. Add tight rental conditions into the mix and there are still investment opportunities to be found in the regional Victorian property market if you know where to look.

Let’s do some analysis below.

What did the regional Victorian property market look like in 2023?

After a strong selling period at the end of Covid lockdowns in early 2022, Victoria’s property market cooled, leading to a downturn in 2023.

“Regional Victoria dwelling prices proved more resilient to the downswing during the first half of 2022, peaking in May 2022, but have fallen -8.7 percent to -9.3 per cent since,” says property investment expert John McGrath. “Key regional markets such as Geelong and Ballarat have recorded a reduction in demand, with prices falling and days on market increasing in both areas.” Sales volumes in regional Victoria dropped 25.9 per cent in the year to June 2023 while new listings fell 8.5 per cent. Over the same period, the median time to sell in regional Victoria increased from 28 to 51 days.

Compared to Melbourne, where property prices gained +3.9 per cent over the year to November, CoreLogic records regional Victorian dwelling values lost -1.6 per cent over this time. Median house prices dropped -2.4 per cent (median value $599,698) and median unit prices fell -0.3 per cent (median value $413,042).

Over the three months to October, Warrnambool (-1.6 per cent) and Ballarat (-1.5 per cent) recorded the greatest falls, while it seems buyers took an interest in more rural properties in Victoria – Echuca - Moama (+2.2 per cent), Warragul - Drouin (+1.8 per cent) and port city  Sale (+1.8 per cent) recorded the highest annual price increases.

On the positive side, there are glimmers of hope as the year ends – regional Victorian housing values gained +0.2 per cent in the month of November while Melbourne values dropped -0.1 per cent.

Additionally, the regional Victorian rental market remains strong for investors, with the Homes Victoria Rental Report revealing median weekly rent increased +5.8 per cent in the year to September. The highest annual changes in rent were for one-bedroom flats located in Morwell (+19.0 per cent), Mildura (+17.4 percent) and North Geelong (+17.2 per cent). Rental supply is also tight – the trend vacancy rate for regional Victoria was 1.9 per cent in September while new lettings had decreased by -5.8 per cent.

Regional Victoria property market predictions 2024

While price growth remains cool, an “exodus” of investors from the Victorian property market could create opportunities for buyers. A 2023 survey by the Property Investment Professionals of Australia (PIPA) found 31.35 per cent of investors in Victoria sold one or more of their properties during the year with 6.4 per cent of those investors selling in regional areas. At the same time, only 4.7 per cent of respondents picked Victoria as the state with the best investment prospects over the next 12 months – down from 12 per cent in 2022.

On the back of this “dramatic plunge” in investor sentiment, Brett Warren, Director of Metropole Properties Brisbane, believes now is a good time to invest in the regional Victoria property market. “I see all this as a window of opportunity for property investors with a long-term focus,” says Brett. “While it might feel counterintuitive to buy in a correcting market, you can also benefit from less competition, low consumer sentiment, having more time, and minimal risk of oversupply.”

PropTrack economist Anne Flaherty has a similarly positive outlook, saying while price growth in regional markets slowed after a pandemic-driven “outperformance,” positive net intrastate migration to regional areas from capital cities is an ongoing long-term trend.

“With affordability currently at record low levels, more home buyers will be pushed further out to the regions and this trend is expected to remain,” Anne says. “Price growth is forecast to continue into 2024, with the supply of homes for sale predicted to remain subdued relative to buyer demand.”

Domain search data for 2023 supports this view, revealing 78 percent of Victorian home hunters are looking for properties within the state, with a sea or tree change still on the agenda for many house hunters in Melbourne. 

“Remote working and the search for more affordable pastures remain strong, with 34 percent of Regional Vic enquiries coming from Melburnians, while only 4 per cent are looking at a city move,” says Dr Nicola Powell, Domain’s Chief of Research and Economics.

How are property prices in regional Victoria expected to change in 2024?

According to experts, property prices in regional Victoria are likely to experience modest growth after a soft start in 2024.

In PropTrack’s Home Price Index, regional Victoria property prices dropped -1.18 per cent over the year to June 2024, taking the median dwelling price to $586,000. House prices fell -12.5 per cent (median price $608,000) while units dropped -0.38 per cent (median price $426,000).

REIV President Jacob Caine says while overall price growth has been minimal, there are pockets of high price growth across regional Victoria. In REIV data for Q2 2024, house prices in Greater Geelong suburbs Little River (+20.4 per cent), Indented Head (+10.3 per cent), South Geelong (+10.1 per cent), and Greater Bendigo suburbs Elmore (+23.9 per cent) and Long Gully (+12.7 per cent), defied the downwards trend.

While property prices in most regional areas are falling, NAB predicts Victorian house prices could increase by +1.6 per cent over the next year and +2.1 per cent over the next two years.

Domain has a more subdued outlook, expecting regional Victoria prices to change by -3 to 0 per cent and unit prices by +1 to +2 per cent in 2024.

What are the best Victorian regional towns to invest in 2024?

CoreLogic’s Best of the Best 2023 report shows these regional Victoria suburbs had the strongest growth in house prices:

• Kyabram, median house value $437,436, up +13.9 per cent over the past year
• Avenel, median house value $618,877, up +13.5 per cent over the past year
• Nhil, median house value $222,670, up +8.2 per cent over the past year
• Korumburra, median house value $587,858, up +0.8 per cent over the past year
• Baranduda, median house value $682,731, up +5.3 per cent over the past year

John McGrath identifies investment potential in Mansfield, saying while its popularity has slumped post-Covid, slower growth has kept prices lower than in other high country lifestyle locations.

Real estate experts OpenLot predict investor interest in Victoria will turn to new housing following recent incentives from the state and federal governments. In their 20 best Victorian suburbs for investing in new houses, the top 5 are all in regional locations:

• Echuca, potential rental yield +7.2 per cent, vacancy rate +1.8 per cent, typical rent $760
• Wangaratta, potential rental yield +6.27 per cent, vacancy rate +1.0 per cent, typical rent $500
• Wurruk, potential rental yield +6.13 per cent, vacancy rate +1.4 per cent, typical rent $495
• West Wodonga, potential rental yield +5.96 per cent, vacancy rate +1.1 per cent, typical rent $530
• Mooroopna, potential rental yield +5.93 per cent, vacancy rate +0.6 per cent, typical rent $490

Other regional Victorian investment property hotspots

CoreLogic lists these suburbs as having the highest gross rental yields for houses in regional Victoria: