Local investors continue to play a dominant role in Victoria’s residential property market, despite shifting economic conditions. In Q3 2024, they accounted for nearly a third of all loan commitments, maintaining their position as the second-largest buyer group. While investor loan volumes have dipped slightly—down from 13,585 in Q2 to 12,569 in Q3—they remain well above last year’s numbers, which saw 11,643 loans in Q3 2023. 

Impact of Tax and Levy Changes 

Recent tax and levy changes have led some investors to offload properties. REA estimates that around 5,000 investment homes have been sold since Victoria introduced revised land tax thresholds. However, these adjustments have not deterred new investors from entering the market. Nearly a year on, the initial market reaction has settled. Unless major policy shifts or macroeconomic changes occur, investor borrowing patterns are unlikely to see further disruption. 

Foreign Investment Sees a Decline 

Foreign investment, on the other hand, has slowed significantly. Only 1,199 Foreign Investment Review Board (FIRB) loans for residential property were approved in Q2 2024—a 16% drop from Q1. Chinese investors remain the most active international buyer group, but their numbers have declined, falling from 2,601 approvals in FY23 to 1,998 in FY24. The total value of these approvals has also dropped, from $3.4 billion to $2.6 billion, impacted by higher foreign investment fees, rising financing costs, and a cooling Chinese economy. 

A Stable Market Outlook 

For now, the Victorian property investment landscape remains stable. Local investors continue to hold firm, while foreign activity has softened. With no major policy changes on the horizon, current trends are likely to persist—at least for the foreseeable future. 

This article references findings from our January 2025 Melbourne Apartments & Townhomes Market Report. Read the full report here.