Victoria’s property markets recorded mixed conditions in H2 2025 as earlier improving sentiment moderated somewhat amid persistent inflation and renewed interest rate uncertainty.
The healthcare and seniors living sector remained resilient, supported by strong demographic fundamentals and investment growth opportunities. Melbourne’s industrial market softened as supply growth outpaced occupier demand. International investment slowed due to Victoria’s tax environment, while demand for development land strengthened due to data centre activity. The office market showed early stabilisation with improved transaction volumes, though vacancy remains elevated and investors continue to favour well-located assets with secure income.
Retail investment remained relatively active, supported by strong capital targeting shopping centres, and the hotel sector benefited from rising room rates despite recent supply additions. Residential markets saw modest improvement in established housing and some apartment segments, although development sites remain subdued.
There is a degree of market uncertainty across all markets in early 2026 driven by geopolitical tensions in the Middle East, and ongoing trade policy adjustments. This environment has contributed to heightened volatility across equity markets and, notably, US Treasury yields. Oil prices are currently rising with impacts to cost of living. Continuing geopolitical instability may place upward pressure on inflation. Early evidence of tariff related inflationary pressure has been reported in the US and is expected to continue during 2026 as businesses pass on higher input and substitution costs. Australia’s economy continues to be influenced by broader economic conditions, contributing to a cautious domestic market.
Looking ahead, higher interest rates may temper activity in 2026, though strong population growth and constrained supply is anticipated to support underlying market stability.
Click the link below to read the full Snapshot.
M3 Property – Victorian Market Snapshot – March 2026
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