It’s not often you see the words “Victoria” and “most affordable” sitting together in a property headline.
But that is exactly what came out of the latest realestate.com.au Housing Affordability Report.
Victoria has now overtaken Western Australia to become the most affordable state in the country for home buyers.
Now, before anyone starts calling Melbourne cheap, there is a little more to the story.
Housing affordability remains challenging across Australia, and higher interest rates have reduced borrowing capacity considerably. But Victoria’s more subdued property
performance in recent years has created something we haven’t been able to talk about for a while — a relative affordability advantage.
And for prepared buyers, that can create opportunity.
So this week, we’re looking at why Victoria is starting to stand out and what that could mean for buyers thinking about their next move.
Why Victoria Affordability Story is Starting to Stand Out
Across Australia, affordability has reached a record low.
According to the latest Housing Affordability Report, a typical household earning around $125,000 a year could afford just 12% of homes sold nationally during FY26, down from 43% only five years ago when mortgage rates were at record lows.
Higher interest rates are a big part of that equation, but property prices matter too.
And this is where Victoria looks different.
While markets such as Perth, Brisbane and Adelaide experienced substantial price growth over recent years, Melbourne’s performance has been much more measured.
The latest PropTrack Home Price Index shows Melbourne prices are now 5.3% below their peak and 4.3% lower than a year ago. By comparison, some markets that recorded very strong growth over the past five years are now dealing with a much tougher affordability equation.
That softer growth has helped Victoria move into the position of Australia’s most affordable state, overtaking Western Australia, where affordability has deteriorated rapidly as prices increased.
For buyers, that doesn’t necessarily mean the decision suddenly becomes easy.
But it can mean more options.
Someone looking to enter the market may have a broader range of suburbs or property types to consider. A family looking at a new home may find that the combination of land, build and location stacks up differently than it did a few years ago.
And buyers who previously felt they were constantly chasing a moving market may now have a little more time to compare those options properly.
That matters.
Because affordability is never just about the advertised price.
It is about the deposit, borrowing capacity, repayments, total project cost, available buffer and whether the finance still works comfortably once everything is taken into account.
From our perspective, this is where the current Victorian market becomes particularly interesting.
There is still demand for good housing, there is still significant investment going into new homes, but buyers may also have more opportunity to be selective and work through the numbers before committing.
And that is generally a much healthier position from which to make a major property decision.
Victoria becoming Australia’s most affordable state does not mean the affordability challenge has disappeared.
Far from it.
But after several years of watching other markets race ahead, Melbourne’s slower run may now be giving buyers something valuable in return — a little more choice, a little more breathing room and potentially a better opportunity to make the numbers work.
For buyers thinking about purchasing or building, the key is understanding what that opportunity looks like for their circumstances.
Because sometimes being the market that didn’t run the fastest can have its advantages.
Thanks again for your continued support and partnership. We’re proud to work alongside you in helping clients understand their options and move forward with greater clarity.
Interest Rates
VARIABLE
These rates are variable and based on a $500,000 loan with principal and interest payments over 30 years (as of May 2026):
1 YEAR FIXED
The rates below are 1-year fixed rates based on a $500,000 loan, with principal and interest payments over a 30-year loan term (May 2026):
