RBA holds steady while Australian property markets diverge

RBA holds cash rate at 3.60% as Gold Coast units overtake Sydney. Discover how Melbourne's affordability creates strategic opportunities for Victorian property buyers.

While Sydney home buyers face million-dollar medians and Brisbane property soars past records, Victorian buyers find themselves in an unusual position: sitting in Australia’s most affordable capital city property market at a moment when national trends create unprecedented strategic opportunities. The Reserve Bank of Australia’s November 2025 decision to hold the cash rate at 3.60% surprised no one, marking the fourth consecutive pause in what has become a carefully calibrated approach to managing inflation while supporting economic growth.

Yet beneath this surface stability, Australian property markets tell dramatically different stories. In a historic shift, Gold Coast unit prices have overtaken Sydney for the first time, with the coastal city’s median unit price reaching $956,000 compared to Sydney’s $927,000. This milestone represents more than statistical curiosity. It reflects fundamental changes in where Australians choose to live and invest their wealth, driven by population movements, infrastructure spending, and the approaching 2032 Brisbane Olympics.

For Victorian buyers and investors, these national trends create unique strategic possibilities. While the Melbourne property market has underperformed other capitals over recent years, this relative weakness has transformed the city into Australia’s most affordable major market. Understanding how these diverging markets affect your property decisions could mean the difference between capitalising on opportunity and missing a critical window.

The November decision and what it means

RBA Governor Michele Bullock described the board’s decision as straightforward. With trimmed mean inflation rising to 3.0% in the September quarter, up from 2.7% in June, the central bank judged it appropriate to maintain restrictive settings. Headline inflation jumped to 3.2%, though much of this increase stemmed from the cessation of electricity rebates across several states.

Tanya Sale, CEO of outsource Financial, characterised Bullock’s approach as “steady as she goes,” noting that the combination of rising inflation and stable employment left the RBA with little choice but to hold. The unanimous board decision involved no discussion of rate cuts, signalling that monetary policy stability will likely extend into early 2026.

This stability brings mixed implications for the Australian property market. Buyers and investors can plan with greater confidence, knowing that borrowing costs should remain steady through the crucial summer selling period. The three rate cuts delivered in 2025, which reduced the cash rate from 4.35% to 3.60%, have already improved borrowing capacity meaningfully. Many borrowers who were previously stretched now manage repayments more comfortably.

When will rates actually fall

The major banks have revised their forecasts significantly following the inflation surprise. ANZ and Westpac both predict a February 2026 rate cut, though Westpac now describes this timeline as “far from certain.” NAB has pushed expectations back to May 2026, while Commonwealth Bank anticipates a prolonged hold, suggesting the RBA may need to act if inflation remains elevated next year.

The RBA characterised its current policy stance as “mildly restrictive” and “close to neutral,” meaning rates sit only slightly above the level that neither stimulates nor restricts economic activity. This positioning gives the central bank flexibility to move in either direction depending on how economic conditions evolve.

What this means for property buyers

For Victorian property buyers, this creates an important strategic decision point. The market has already priced in most of the benefit from the 2025 rate cuts. If further reductions arrive in early 2026, borrowing capacity will improve again, likely bringing more buyers into the market and increasing competition.

Those who act during the current pause may benefit from reduced competition before the next wave of rate-sensitive buyers enters the market. Why wait for rate cuts that will bring bidding wars when you can negotiate in today’s calmer conditions?

A coastal city overtakes the harbour

The Gold Coast’s ascension to Australia’s most expensive unit market represents one of the most remarkable property stories of the decade. Ray White Chief Economist Nerida Conisbee noted that this milestone would have seemed impossible just years ago, when the Gold Coast was viewed as an affordable coastal alternative to Sydney.

The 101% growth in Gold Coast unit prices over the past decade reflects sustained demand from multiple buyer segments. Main Beach leads the premium market with a median unit price of $1.73 million, having gained $880,000 in value over ten years. Burleigh Heads and Palm Beach follow closely, with decade gains of $760,000 and $740,000 respectively.

Even more affordable coastal suburbs like Currumbin-Tugun have recorded 134% growth, adding $740,000 to median values. Miami, Coolangatta, Mermaid Waters, and Paradise Point have all recorded gains between $670,000 and $700,000 since 2015, confirming broad strength across the city’s prime coastal corridor.

What’s driving the Gold Coast surge

Population growth across southeast Queensland continues accelerating, driven by interstate migration from both Sydney and Melbourne. The region attracts residents seeking lifestyle improvements, lower living costs compared to southern capitals, and warmer weather. The three rate cuts in 2025 provided meaningful boosts to borrowing capacity, allowing buyers to compete more aggressively for coastal properties.

Developers have responded with a wave of luxury apartment projects featuring resort-style amenities, large floorplates, and premium finishes. This product now defines the modern Gold Coast skyline, replacing the older holiday accommodation that previously dominated beachfront areas. Downsizers from Sydney and Melbourne, often cashed up from selling expensive properties in their home cities, willingly pay premium prices for waterfront living with five-star facilities.

Brisbane 2032 Olympics effect already visible

The upcoming Brisbane 2032 Olympic and Paralympic Games cast a long shadow over Queensland property markets. The state government has committed $7.1 billion to Olympic venues and more than $12.4 billion to transport upgrades. These infrastructure projects are reshaping southeast Queensland’s connectivity and liveability years before the opening ceremony.

Historical precedent suggests significant property market impacts from Olympic hosting. Sydney property values jumped 60% between the 1993 Games announcement and the 2000 event. While past performance doesn’t guarantee future results, the infrastructure legacy typically creates sustained demand uplift in host cities.

The decentralised nature of Brisbane 2032 means benefits extend well beyond the capital. The Gold Coast, which hosted venues during the 2018 Commonwealth Games, continues benefiting from that infrastructure investment. Sunshine Coast venues will bring similar improvements to that region. This geographic spread of Olympic-related development creates multiple property investment opportunities across southeast Queensland.

Construction activity related to Olympic preparation generates substantial employment. Estimates suggest 130,000 direct jobs, including 10,000 during the Games year. This employment creation drives housing demand both from construction workers and the broader economic activity that major projects generate. The Northshore Hamilton Athletes’ Village will be repurposed after the Games into mixed-use development, catalysing $500 million in private investment.

Supply constraints supporting prices

High construction costs in Queensland limit the viability of affordable developments. New apartment stock priced below $750,000 has become almost impossible to deliver without significant planning incentives or cost reductions. This supply constraint underpins continued price strength across Gold Coast and Brisbane markets.

Investor lending in Queensland has reached record levels, with the Gold Coast among the primary beneficiaries. Rising rents and tight vacancy rates attract investors seeking both income returns and capital growth potential. First home buyer activity is also increasing, supported by government schemes and improved borrowing costs. Many first-time buyers target the apartment market, where smaller properties converted from holiday accommodation offer relative affordability compared to detached houses.

This Queensland success story sets an important context for understanding Victoria’s current position. While the Gold Coast and Brisbane boom, Melbourne’s affordability creates a different kind of opportunity, one that smart buyers are beginning to recognise.

Victoria’s counter-cyclical property position

While Gold Coast unit prices soar and Sydney remains prohibitively expensive, the Melbourne property market presents a starkly different picture. Melbourne’s median dwelling value of $805,880 makes it Australia’s most affordable capital city, a position few would have predicted five years ago.

Annual growth of just 1.9% and five-year growth of 17.5% place Melbourne well below the combined capitals benchmark of 35.7% over the same period. Regional Australian markets have grown 58.7% over five years, making Melbourne’s performance appear particularly subdued. Current median values remain 3 to 5% below the March 2022 peak, meaning anyone who purchased near that peak has experienced capital losses rather than gains.

Why Melbourne has underperformed

Several factors explain Melbourne’s underperformance. The 2024 Victorian land tax changes significantly dampened investor demand, and understanding why requires examining the numbers. The government lowered the land tax-free threshold from $300,000 to $50,000, fundamentally changing investment economics.

For a typical investment property with land valued at $650,000, this change means approximately $1,300 in additional annual tax. Compare this to New South Wales with a $1,075,000 threshold or Queensland’s $600,000 threshold, and Victoria becomes substantially less attractive for property investors. This isn’t merely an administrative change. It directly impacts investment returns and cash flow, particularly for investors holding multiple properties.

The policy change, combined with new flat-rate levies on investment properties, prompted many investors to sell Melbourne holdings and redeploy capital interstate or to regional Victoria. Analysis suggests almost 5,000 more investors sold Victorian properties following the announcement compared to other Australian states, creating increased listings and reduced buyer competition.

COVID-19 lockdowns hit Melbourne harder than any other Australian capital. The city’s population fell by 1.1% during the pandemic, and while migration has since recovered strongly (Victoria gained 132,500 people in 2024), this population disruption created a demand vacuum that took years to fill.

A temporary supply glut from historically high dwelling completions created additional price pressure. However, building approvals in Victoria now run 12% below the decade average, signalling that supply constraints will likely emerge over coming years.

The opportunity for Victorian buyers

This period of relative Melbourne property market weakness creates significant opportunities for well-positioned buyers. Property listings have increased 3.4% above the five-year average, giving buyers greater selection and negotiating power. In a market with more supply and reduced investor competition, first home buyers and owner-occupiers can secure properties without the intense bidding wars that characterised previous boom periods.

First home buyers now comprise nearly twice the national average in the Victorian market. This overrepresentation reflects Melbourne’s relative affordability compared to other capitals. A median-priced home in Melbourne now costs less than in Adelaide, Brisbane, or Perth, following very strong growth in those cities over the past five years. Even comparing just detached houses, Melbourne’s median sits below Brisbane’s.

Victorian housing finance commitments have trended upward since 2023, currently sitting 17% above the 10-year average. This suggests buyers recognise the current opportunity, with non-first home buyer owner-occupier finance levels up 11% compared to the preceding year.

First home buyers have also increased activity by 5%, while investors now account for 30% of total housing finance commitments in Victoria.

The strategic timing question

The strategic question for Victorian buyers centres on timing. Waiting for the perfect bottom is impossible, as market turning points only become clear in retrospect. However, several indicators suggest Melbourne is at or near a cyclical low.

Four consecutive months of price growth in 2025 mark a notable turnaround after a year of declines in 2024. Major infrastructure projects including the Metro Tunnel and level crossing removals continue improving connectivity and liveability. Population growth has rebounded to record levels, while supply constraints from reduced building approvals will likely support prices as demand pressure builds.

Regional Victoria outperforming Melbourne

The regional Victorian property market has performed more strongly than Melbourne through 2025. The median regional house price of $620,000 represents solid quarterly growth, and while values remain below 2022 peaks, regional markets have demonstrated greater resilience than metropolitan Melbourne.

Centres like Geelong, Ballarat, and Bendigo attract buyers priced out of Melbourne alongside those seeking lifestyle changes without losing access to metropolitan job opportunities. Geelong’s proximity to Melbourne via improved highway and rail connections makes it particularly attractive for commuters. The Surf Coast offers lifestyle appeal with reasonable proximity to Melbourne, while Ballarat and Bendigo offer historic charm, established amenities, and relative affordability.

Rental yields in regional Victoria remain stronger than metropolitan Melbourne, with regional gross yields averaging around 4.4% compared to Melbourne’s 3.7%. This yield advantage attracts investors seeking better cash flow returns, particularly those deterred by Melbourne’s new land tax regime.

Victorian government policies supporting buyers

Multiple Victorian government initiatives aim to support property buyers, particularly first-time purchasers. The stamp duty exemption for properties valued up to $600,000 provides complete relief from duty, potentially saving buyers up to $31,070. Properties valued between $600,001 and $750,000 receive concessional duty on a sliding scale.

The First Home Owner Grant provides $10,000 for eligible buyers purchasing or building new homes valued up to $750,000. This grant applies only to new properties, including house and land packages and newly built apartments. While the $750,000 cap limits applicability in expensive inner suburbs, many first home buyers successfully use this grant for units, townhouses, or house and land packages in outer suburbs or regional areas.

The expanded First Home Guarantee Scheme allows eligible buyers to purchase with just a 5% deposit without paying Lenders Mortgage Insurance. In Melbourne, the property cap has increased to $950,000, putting a wider range of properties within reach. This scheme has proven particularly popular among first home buyers who can save a deposit quickly but struggle to reach the traditional 20% threshold.

Comparing markets and strategic implications

What Queensland’s strength means for Victorian investors

The divergence between Queensland’s booming property markets and Victoria’s subdued conditions prompts strategic questions for Victorian investors. Some are diversifying portfolios by purchasing investment properties in high-growth interstate markets, seeking to capture stronger capital appreciation while maintaining their Victorian owner-occupied residence.

Queensland offers several advantages for interstate investors: stronger population growth, no land tax on properties below $600,000, more favourable rental laws compared to Victoria’s recent reforms, and clear infrastructure catalysts from Olympic preparation. The Gold Coast and Brisbane markets have demonstrated sustained momentum, with multiple suburbs recording double-digit annual growth.

However, interstate investment carries distinct risks that Victorian investors must carefully evaluate. Investors lack local knowledge, making suburb selection more difficult without boots on the ground understanding of neighbourhood dynamics. Property management from interstate adds complexity and reduces oversight. Markets that have already experienced strong growth may offer limited upside compared to markets still in recovery phases.

Queensland’s construction pipeline will eventually increase supply, potentially moderating growth precisely when investors expect continued appreciation. The 2018 Gold Coast Commonwealth Games provide a cautionary tale. That event recorded minimal property price growth post-games, contrary to earlier expectations.

Victorian investors must also carefully evaluate the full cost implications of new land tax settings. Properties with land values above $50,000 now incur land tax, significantly increasing holding costs for investment properties. For some investors, particularly those with multiple properties, these increased taxes make Victorian investments unviable compared to interstate alternatives. However, for others, buying in Melbourne near a cyclical low while competitors flee may prove the superior long-term strategy.

Melbourne’s recovery trajectory

Despite recent underperformance, several factors support a Melbourne property market recovery through 2026 and beyond. The city recorded four consecutive months of price growth through early 2025, representing the first sustained upward movement since 2021. This turnaround reflects improving sentiment as rate cut expectations solidified.

Major infrastructure projects continue transforming Melbourne’s connectivity. The Metro Tunnel, when completed, will create a new rail link through the city centre, improving access to key employment hubs. Extensive level crossing removal programs reduce congestion and improve suburban amenity across Melbourne’s middle-ring suburbs. The North East Link, Western Highway upgrade, and other major road projects enhance regional connectivity, bringing areas like the Yarra Valley and Mornington Peninsula closer to employment centres.

Population growth has rebounded strongly after pandemic-related declines. Victoria’s gain of 132,500 people in 2024, driven by overseas migration, restores demand pressure for housing. The state continues attracting skilled migrants, international students, and returning Australians, all requiring accommodation. With building approvals running 12% below average, supply will struggle to meet this renewed demand, creating conditions for price appreciation.

Expert predictions suggest Melbourne could lead national price growth by late 2025 or early 2026. Money.com.au’s mortgage expert Alex Dore stated that Melbourne and Darwin represent the strongest property markets at present, with Melbourne likely to lead national growth by year-end 2025. This prediction reflects the counter-cyclical opportunity. Markets that have lagged typically experience catch-up growth as buyers recognise relative value.

Practical guidance for Victorian property decisions

Strategic timing for different buyer types

First home buyers face a critical decision in the current Victorian property market. Maximum leverage of Melbourne’s affordability advantage requires acting while competition remains moderate. Once rate cuts resume and prices begin rising consistently, entry becomes more difficult. Government schemes including stamp duty exemptions and the First Home Guarantee provide substantial support, but income caps and property value limits may exclude buyers if prices rise significantly.

The strong rental demand across Melbourne means first home buyers who purchase appropriately within their budget can rent out properties if circumstances change, providing flexibility. Focus should remain on established middle-ring suburbs with good transport connections, schools, and amenities, rather than outer fringe areas that may take longer to appreciate.

Property investors need to carefully weigh Victoria’s new land tax regime against the counter-cyclical entry opportunity. Reduced competition from other investors creates better buying conditions and negotiating power. Focus on areas benefiting from infrastructure improvements, with strong owner-occupier appeal rather than purely investor-driven demand. Examine regional Victoria for better yields and lower land tax exposure.

Upgraders looking to move into larger or better-located properties benefit from current market dynamics. Selling an existing property in stable conditions while buying in a softer market means upgraders can move into higher-quality areas at accessible prices. The gap between entry-level and premium property prices has narrowed during Melbourne’s period of subdued growth, making upgrades more achievable.

Melbourne suburbs showing resilience

Not all Melbourne suburbs have experienced equal price pressure. Frankston recorded annual growth of 9.2%, with its median value reaching $813,941. The suburb’s popularity reflects the upcoming $1.1 billion Frankston Hospital redevelopment, which enhances local health services and creates job opportunities. Frankston offers bayside amenity at accessible price points for buyers priced out of closer bayside suburbs like Brighton and Hampton.

Tullamarine-Broadmeadows ranks second with a median price of $721,266 and annual growth of 6.8%. These outer northern suburbs benefit from airport proximity and industrial employment opportunities. Infrastructure improvements and increased first home buyer activity drive demand in these traditionally affordable areas, with Craigieburn and Greenvale also showing strength.

Middle-ring family suburbs with infrastructure access continue showing solid performance. Areas near completed or planned Metro Tunnel stations (including Parkville, Arden, Kensington, and North Melbourne) attract buyers seeking improved connectivity to employment centres. Inner-ring gentrifying suburbs like Preston, Reservoir, and Coburg where older housing stock is being renovated and rebuilt offer longer-term appreciation potential as these areas transition to higher-value demographics.

Box Hill benefits from established Asian community, excellent schools, and Box Hill Hospital proximity. Glen Waverley maintains family appeal with top-tier schools and Monash University access. Suburbs along the Mernda and Hurstbridge train lines have shown resilience due to improved public transport connectivity to the CBD.

When to act in the current market

The spring selling season offers maximum property selection as vendors bring stock to market during traditionally strong selling periods. Current rate stability allows confident financial planning, with borrowers able to fix rates or choose variable loans knowing the cash rate should remain steady through early 2026.

Acting before potential rate cuts increase competition provides strategic advantage. Once the RBA resumes cutting rates, borrowing capacity improves across the market, bringing more buyers into competition for available properties. Those who secure property during the current pause benefit from reduced competition and avoid bidding against increased numbers of rate-cut motivated buyers.

Elevated listing levels mean buyers have negotiating power that may not persist once market momentum builds. Vendors facing slower markets often accept prices below their initial expectations, creating opportunities for buyers who approach negotiations strategically with pre-approval and clear understanding of property values in their target suburbs.

Finance guidance and professional support

Pre-approval remains critical in competitive situations, even in the current softer market. Vendors and agents take approved buyers more seriously during negotiations, and pre-approval allows buyers to act quickly when they find suitable properties. The current rate environment allows borrowers to lock in rates with confidence that sharp increases are unlikely in the near term.

The fixed versus variable rate decision depends on individual circumstances and risk tolerance. Fixed rates provide certainty for budgeting but limit flexibility if rates fall further. Variable rates allow borrowers to benefit from any future rate cuts but carry risk if inflation proves more persistent than expected. Many borrowers choose split loans, fixing a portion for certainty while keeping some funds variable for flexibility.

Maximising borrowing capacity with stable rates requires understanding how lenders assess serviceability. Most lenders add buffers to current rates when calculating maximum borrowing capacity, meaning the actual rate you pay differs from the rate used for serviceability calculations.

First home buyer schemes provide substantial benefits but require navigating complex eligibility criteria. The interaction between state and federal schemes, income limits, property value caps, and occupancy requirements creates complexity that professional advice helps clarify. Attain Loans specialises in Victorian property finance, helping buyers and investors navigate current market complexity with tailored strategies that maximise government scheme benefits while structuring loans to suit individual circumstances.

Whether you’re a first home buyer seeking to maximise government schemes, an investor evaluating interstate opportunities versus Melbourne’s counter-cyclical position, or an upgrader looking to move into your ideal home, professional finance advice ensures you structure your borrowing optimally. Attain Loans provides comprehensive property finance solutions with deep understanding of the Victorian market, current lending policies, and how to position applications for approval even in tightened lending environments.

The complexity of comparing Melbourne’s opportunities against interstate alternatives, understanding land tax implications for investment properties, and structuring finance to accommodate future goals requires expertise that extends beyond simple rate comparison. Working with specialists who understand these nuances can mean the difference between securing optimal finance and settling for suboptimal outcomes that cost thousands over the loan term.

Key takeaways for Victorian buyers

The Australian property market’s current divergence creates clear strategic implications. Queensland markets, driven by Olympics infrastructure and interstate migration, demonstrate what recovery looks like when multiple positive factors align. Sydney remains expensive but stable. Melbourne offers affordability that other capitals have lost, combined with strong population recovery, major infrastructure delivery, and supply constraints that will support future price appreciation.

Victorian buyers who recognise this counter-cyclical opportunity can position themselves ahead of the inevitable rebound. The combination of improved borrowing capacity from 2025 rate cuts, reduced investor competition from land tax changes, elevated listings providing selection, and generous government support schemes rarely aligns so favourably. Rate stability through early 2026 provides planning certainty that allows confident decision-making.

However, timing and information advantage matter in property markets. Those who understand the strategic implications of the RBA’s steady approach, Queensland’s Olympic-driven boom, and Victoria’s counter-cyclical position can make informed decisions rather than simply following crowd sentiment. Markets don’t wait for hesitant buyers to feel completely comfortable. By the time everyone agrees Melbourne represents opportunity, prices will have already adjusted to reflect that consensus.

The divergence in Australian property markets creates winners and losers. Victorian buyers positioned to capitalise on Melbourne’s affordability advantage may look back on 2025 to 2026 as a critical opportunity period. While others watch Queensland prices soar and wonder if they missed out, informed Victorian buyers can build wealth by acting when value exists rather than chasing markets that have already run.

The question isn’t whether Melbourne will recover. Strong fundamentals virtually guarantee eventual appreciation. The question is whether you’ll position yourself to benefit from that recovery or watch it unfold from the sidelines. In property investment, as in many endeavours, the best opportunities often emerge when others are hesitant. Melbourne’s current position creates exactly that scenario for buyers who understand what they’re seeing.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.