January 2026
Cameron Kusher
This column is designed to give you the inside information on what the latest data shows and what you need to know for your discussions with buyers and vendors.
Here are the top five things to talk with your vendors about:
Interest rates
The Reserve Bank doesn’t meet in January, with the next meeting at the start of February, so nothing has changed with interest rates this month.
The latest monthly inflation data for November 2025 showed that headline inflation was 3.4 per cent higher over the year which represented a slowing from October but was still well outside of the target range of 2 per cent to 3 per cent.
The Reserve Bank’s preferred underlying inflation measure was 3.3 per cent higher over the year and remained outside of the target range.
The Reserve Bank is still leaning heavily on quarterly inflation data which is published for the December 2025 quarter in late January, and it will be a key determinant of whether they change interest rates in February.
At this stage I don’t expect an interest rate increase in February however, it is a possibility. Either way, inflation remains elevated and there’s very little prospect of interest rate cuts in the imminent future with interest rate increases more likely.
As rates increase, we typically see an easing of consumer sentiment and slower demand for housing so if you are contemplating selling, it may be wise to get to the market sooner rather than later when interest rates may be higher and demand to purchase may subsequently be lower.
The cost of housing throughout the state is on the up
Over the December 2025 quarter, house and unit prices in Melbourne and regional Victoria were higher however, price growth remains much more moderate than in most other states and territories.
Melbourne house prices were $973,500 over the December 2025 quarter which was 1.8 per cent higher over the quarter and 3.8 per cent higher over the year. Melbourne unit prices were 2 per cent higher over the quarter and 2.1 per cent higher over the year, reaching $656,500.
House prices in regional Victoria rose by 1.2 per cent over the quarter and 5.0 per cent higher over the year while unit prices were 5.0 per cent higher over the quarter and 4.5 per cent higher over the year. This saw house and unit prices reach historic highs over the quarter of $643,000 and $461,000 respectively.
Victorian price growth has remained supressed over recent years relative to the other states and territories and increases remain moderate. In saying this, more people are becoming attracted to the market due to its relative affordability.
Given this, vendors still need to set attractive and competitive prices in order to sell but they should also consider how they can target interstate buyers and sell them on the relative affordability of their property, particularly if the buyer is an investor.
December saw a seasonal slowing of established properties for sale but they remain at elevated levels
The December 2025 listing data release from SQM Research found that in Melbourne, there were 11,136 new listings over the month and 34,719 total listings.
Unsurprisingly, both new and total listings were lower over the month as new listings slow in December and vendors stop advertising for the Christmas and New Year period.
Compared to volumes in December 2024, Melbourne new listings were 10.2 per cent higher in December 2025 however, total listings were 6.4 per cent lower.
Although total listings were lower over the month and year, they remain at an elevated level.
This means if you are thinking of selling, purchasers still have quite a lot of choice and you have to ensure you are doing whatever you can to differentiate your property from others on the market.
Properties continue to sell quicker than they did a year ago
In Victoria, the median days on market for private sales in December 2025 was 39 days which was split between a median of 36 days in Melbourne and 51 days in regional Victoria.
Days on market was 10 days lower than a year ago in Victoria, 7 days fewer in Melbourne and 11 days fewer in regional Victoria.
While this is encouraging to see, it is important for vendors to remember that this metric is only measured across properties that sell.
Given this, it is imperative if you want a quick sale that you attract buyer attention as soon as you go on-market and that you listen to the feedback from the market in order to achieve a timely property sale.
New housing supply continues to lag targets which will put future pressure on prices
The latest data from the Australian Bureau of Statistics shows that Victoria is continuing to miss its Housing Accord targets.
Over the September 2025 quarter Victoria saw 13,415 dwellings commence construction which was 4.9 per cent lower over the quarter and 2.7 per cent lower than the same quarter in 2024.
What was more encouraging was that there were 13,748 dwelling completions over the quarter which was 9.0 per cent higher over the quarter but 10.1 per cent lower than the September 2024 quarter.
Victoria is doing better with its Housing Accord target targets however, over the first five quarters of the target period 69,655 dwellings have been completed compared to a target of 76,580 completions.
When you have a rapidly growing population such as Victoria has its imperative you build sufficient new housing stock and that is currently not happening.
Longer-term persistent under-building will drive up the cost of housing, particularly in more desirable locations so vendors should keep this in mind when selling and when making future property purchases.
Here are the top five things to talk with your buyers about.
Price growth continues to accelerate
Over recent months, housing prices throughout the state have continued to climb and this trend has continued. Relative to other states, Victoria has a strong relative affordability which is attracting more buyers and pushing prices higher.
Price growth remains moderate but the reality is that the longer you wait to purchase the more likely it is that you will be paying more to do so.
We’re seeing increased demand for housing throughout the state coupled with low new supply and the gap continuing to widen between Victorian prices and those elsewhere which will drive more interest, particularly from investors, in purchasing within the state.
Don’t expect any further interest rate cuts, in fact rates are likely to rise this year
While we haven’t heard much over the Christmas and New Year period from the Reserve Bank, it is looking increasingly likely that at some point in 2026 interest rates will rise.
Inflation remains elevated and outside of the Reserve Bank’s target range and most data points to consumer spending picking up which is likely to see interest rates push higher this year.
If you are waiting for rate reductions, they are unlikely to happen. The best advice is to talk to your bank or broker and get a pre-approval. If you wait too long, you may miss your opportunity to purchase in the current cycle.
Well priced properties are selling quicker as demand for Victorian housing rises
I’ve already highlighted how housing prices are both relatively affordable and starting to rise, but the data also shows properties are selling quicker throughout the state.
In December 2025, properties sold via private sale were selling 10 days quicker than a year ago throughout the state, 11 days quicker in regional Victoria and 7 days quicker in Melbourne.
This highlights that when vendors set appropriate prices for the market, properties are being snapped up quickly by purchasers.
The lift in demand for properties is also reflected in the REIV sales estimates data. REIV estimates that in the December quarter of 2025 there were 3.3 per cent more sales that there were in the December 2024 quarter.
If there is a property that you believe is appropriately priced, it is becoming increasingly important in this market to lodge a compelling offer, both in terms of price and terms, as quickly as you can.
After a strong last quarter of 2025, listing volumes are likely to be lower over the next few months
While December and January are seasonally quieter months for properties being put up for sale, the next few months is likely to see a lower volume of new stock coming to the market.
The December 2025 listing data release from SQM Research found that in Melbourne, there were 11,136 new listings over the month and 34,719 total listings.
Compared to volumes in December 2024, Melbourne new listings were 10.2 per cent higher in December 2025 however, total listings were 6.4 per cent lower.
For buyers, over the coming months there is likely to be somewhat less choice than they have seen over the past year at a time when demand for properties in Victoria is increasing.
This again highlights the importance in submitting compelling offers to vendors of quality properties as soon as possible if you hope to secure the purchase.
Investors continue to return, attracted by the affordable prices rising rents and improving rental yields
The most recent data for the September 2025 quarter found that the value of lending to investors accounted for 33.9 per cent of total new lending in Victoria over the quarter.
This was the greatest share of lending to investors since September 2017 and the value was 24.1 per cent higher over the year.
While the increase in taxes on investment properties and other legislation changes have driven some investors out of their properties, Victoria’s relative affordability, strong rental returns are attracting more investors back into the market, particularly from interstate.
Over the past year, rental yields for houses in Melbourne fell from 3.3 per cent to 3.2 per cent meanwhile, Melbourne unit rents rose from 4.6 per cent to 4.7 per cent and are the highest they’ve been in many years.
Regionally, house and unit rental yields were unchanged over the year at 4.1 per cent and 4.8 per cent.
Rental yields are higher than many other states in which prices have surged recently and the lower purchase of properties ensures that Victoria remains an attractive location for investment purchasers, especially from non-Victorian buyers.
About Cameron Kusher
Over the last 20 years Cameron has worked as a property researcher for major businesses such as PRDnationwide, CoreLogic (now Cotality) and REA Group.
Cameron spent 12 years at CoreLogic as the Head of Research for Australia and 5.5 years at REA Group as the Director of Economic Research. Over the past 17 years he has become a well-regarded thought-leader on the residential property market and delivered thousands of presentations to the industry, customers and consumers.
He is passionate about taking complex economic and property insights and making them easy for anyone to understand, free of the jargon that most economic and property presentations tend to contain.