Regional Victoria housing market faces a more measured year ahead

AFTER a strong 2025, Australia’s housing market is entering 2026 with slower momentum.

The Reserve Bank of Australia recently lifted the cash rate by 0.25 percentage points to 3.85 per cent, signaling a return to a tightening cycle.

According to Cotality’s Home Value Index, the outlook is “less optimistic than 2025”, with higher borrowing costs and affordability pressures expected to temper buyer activity.

Regional Victorian markets such as Geelong, the Surf Coast, Bendigo and Ballarat remain resilient. These areas continue to attract buyers with lifestyle appeal, population growth and a shortage of housing supply, even as higher interest rates place additional pressure on household budgets.

Cotality estimates that a typical Australian household now spends around 45 per cent of pre-tax income servicing a mortgage on a median-priced home, prompting many buyers to carefully reconsider their options.

Affordability pressures are shaping local market trends. It now takes roughly 11 years for a median-income household to save a 20 per cent deposit, encouraging many buyers to explore alternatives such as units or more affordable suburbs.

In 2025, unit prices in Geelong and Bendigo outpaced houses, while Ballarat and the Surf Coast saw steady competition for entry-level homes. These dynamics are expected to naturally slow buyer activity in 2026, even if prices remain relatively stable.

Several factors are preventing a sharp price decline. Housing supply remains tight across regional Victoria, helping to sustain values in established hubs.

Government schemes, including the expanded First Home Guarantee, continue to support first home buyers, maintaining competition in lower-to-middle price brackets.

As affordability pressures persist, both first home buyers and investors are likely to focus on these segments throughout 2026.

Navigating this environment can be challenging. Understanding the right loan structure, government incentives, and timing your purchase can make a significant difference, particularly in regional markets where conditions can shift quickly.

This is where mortgage brokers can add real value. By offering tailored guidance, comparing multiple lenders and helping buyers and investors make informed decisions, brokers help clients confidently move forward, even in a higher interest rate environment.

While the rapid growth of 2025 is unlikely to be repeated, regional Victorian markets are expected to enter a period of consolidation rather than correction.

Buyers and investors who access professional advice and carefully assess their options are best positioned to make strategic decisions and achieve their homeownership or investment goals.

WITH THE UFINANCIAL TEAM

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