Who's the right agent for you?

Compare, research and shortlist now.

Compare Agents

Best regional VIC areas for property investment 2021

Profile photo of Craig Gibson

Thinking of moving or investing outside of Melbourne? Then you'll want to know the best regional areas in Victoria to put your money. 

Regional and rural markets are often seen as plodding along - and this can be the case - though in 2018/2019 regional Victoria outperformed the Melbourne market. This was down to a number of factors, including affordability and diversifying local economies - which can make them an attractive lifestyle option or investment opportunity. 

With this in mind, read our guide to the hottest regional markets in Victoria for property investment in 2020, so you can make an informed decision and maximise your ROI. 

Best regional areas in Victoria to invest in property

regional Victoria
132km away from Melbourne, Bendigo is a regional hotspot where vacancy rates are low, DoM are short and employment is steadily growing.

In terms of the best regions to invest in, Domain's Commercial Real Estate arm recorded the top 10 most searched areas in Australia for rural properties, with picturesque Mildura, in the northwest of the state making the list. 

Sitting on the banks of the Murray River, houses have advanced +11.82% for the YTD, for a median house price of $310,000 for houses. Units have grown +4.7% over the same timeframe to a median of $223,000. 

Houses in Mildura rent out for $330 per week and units for $250 per week. Performance over the medium term - 5 years - is equally impressive, with houses advancing +5.5% for houses and units +6.5%.

You should also put Mount Pleasant, a suburb in regional Ballarat, on your radar. Here, median house prices climbed +21.31%% for the YTD. The postcode has recorded an impressive compound growth rate of +7.3% for houses and +2.7% for units over the last five years. 

Median property prices in Mount Pleasant range from $377,000 for houses and $244,750 for units. Houses here rent out for $313 per week while you can expect to charge $275 per week for a unit. 

"Median house prices in Mount Pleasant, a suburb in regional Ballarat, climbed +21.31% for the YTD"

Regional centre Bendigo, some 132 kilometers from the bright lights of Melbourne, is another growth hotspot. Here the positive signals include low vacancy rates, shorter days on market and an uptick in employment growth

The median house price is currently $412,500, while units are at $260,000. You can expect a weekly rent of $290 for a house, while units rent for $250 per week. Houses in Bendigo have appreciated +3.3% over the past five years. 

AreaMedian house price12 month growth rate5 year compound growth rateMedian rental yield
Mildura 3500$310,00011.82%5.5%5.5%
Mount Pleasant 3350$377,00021.31%7.3%4.3%
Bendigo 3550$412,5007.01%3.3%3.7%

What should buyers and investors be wary of in regional Victoria?

Like any regional market, you often have better prospects for positive cash flow from your investment over the long term, so bear this in mind when investing in regional Victoria. 

Baseline data from the Real Estate Institute of Victoria (REIV) shows that the median sale price for regional properties is currently $409,000 and has appreciated +0.9% over the quarter to September '19.

Metro Melbourne, on the other hand, has a median sale price of $830,000 and has advanced +4.5% over the same timeframe. This makes regional property significantly more affordable, but capital growth prospects are not as attractive.

Look at asking rents and they also tell a very different story. Median weekly rents in regional areas are currently $340, and you can expect a rental yield of 4.3%. Contrast this with a median rental yield of 2.9% for a house in metro Melbourne. 

"Regional property is significantly more affordable, but capital growth prospects are generally not as attractive as metro markets"

The key is to research the regional market market thoroughly and look at the economic drivers in the local economy. Is it sufficiently diverse and not too dependent on a single industry? 

You also need to investigate how much investment is planned for the area in the medium/long term. Is this enough to sustain growth and drive up prices and demand for property?

How can we expect the VIC regional property market to change in 2020?

Geelong real estate
A bird's eye view of the regional hub, Geelong | Source: Volunteering Geelong

QBE's 2019–2022 Australian Housing Outlook forecasts that overall regional markets will have modest growth prospects in the year ahead, improving over the medium term. 

This is true for regional centres like Ballarat, which they believe will continue to be popular with commuters who appreciate its relative affordability and proximity to Melbourne. They forecast median house prices to grow +8% by June 2022. 

QBE thinks Bendigo's market will experience similar gains, with the median house price increasing by +7% to reach $395,000 by June 2022. The same factors are at play for Geelong, though prices rise are expected to be a little more subdued in the medium term, advancing +4%, for a median house price of $540,000 over the same timeframe. How can we expect the VIC regional property market to change in 2020?

Geelong real estate
A bird's eye view of the regional hub, Geelong | Source: Volunteering Geelong

QBE's 2019–2022 Australian Housing Outlook forecasts that overall regional markets will have modest growth prospects in the year ahead, improving over the medium term. 

This is true for regional centres like Ballarat, which they believe will continue to be popular with commuters who appreciate its relative affordability and proximity to Melbourne. They forecast median house prices to grow +8% by June 2022. 

QBE thinks Bendigo's market will experience similar gains, with the median house price increasing by +7% to reach $395,000 by June 2022. The same factors are at play for Geelong, though prices rise are expected to be a little more subdued in the medium term, advancing +4%, for a median house price of $540,000 over the same timeframe. 

How to identify a postcode with high growth potential

Shortlist your regional investment properties by identifying suburbs and postcodes in Victoria where as many of the following indicators are present, specifically:

Rising property values, preferably stable growth in house prices over a relatively short time frame - typically a few years, though it will depend how long you intend to invest for.

A declining days on market (DOM) metric, is a good sign that there is strong demand in a suburb - as properties don't list for too long. You do need to know your local market, as DOM varies widely by market and location.

Rising rental yields, which details how much income/rent a property could fetch over a timeframe, as a proportion of its value. Rising rental yields are a good sign that there is strong demand for rental accommodation.

High clearance rates at auctions, which is detailed as a percentage of the number of properties sold over a week/month.

Low vacancy rates indicates there is strong demand for rental property in an area. 

You can also track other economic indicators, like government investment in infrastructure or other job creation initiatives that will boost the local economy.How to identify a postcode with high growth potential

Shortlist your regional investment properties by identifying suburbs and postcodes in Victoria where as many of the following indicators are present, specifically:

Rising property values, preferably stable growth in house prices over a relatively short time frame - typically a few years, though it will depend how long you intend to invest for.

A declining days on market (DOM) metric, is a good sign that there is strong demand in a suburb - as properties don't list for too long. You do need to know your local market, as DOM varies widely by market and location.

Rising rental yields, which details how much income/rent a property could fetch over a timeframe, as a proportion of its value. Rising rental yields are a good sign that there is strong demand for rental accommodation.

High clearance rates at auctions, which is detailed as a percentage of the number of properties sold over a week/month.

Low vacancy rates indicates there is strong demand for rental property in an area. 

You can also track other economic indicators, like government investment in infrastructure or other job creation initiatives that will boost the local economy.