Whether to sell or hold depends on your gearing and tax tolerance. Holding is supported by long-term structural undersupply and a KPMG projection of 6.6% house price growth for 2026, while selling is driven by Victoria’s heavy tax burden and a rise in listing competition (Raine & Horne).
The decision to divest or refinance is currently split between long-term growth potential and immediate fiscal pressure. Investors are weighing the prospect of a 2027 recovery against the cumulative effect of state tax increases and recent RBA rate hikes.
The case for holding and refinancing
Long-run structural drivers, including chronic undersupply and Australia’s fastest population growth, support medium-term value appreciation. KPMG projects 6.6% Melbourne house price growth for 2026, while ANZ and Domain forecast a recovery in 2027. Properties that are positively geared or near-neutral allow owners to offset holding costs while deferring capital gains tax (CGT).
Reasons for divestment in 2026
Victoria currently has Australia’s heaviest property tax burden, with land tax rises, the VRLT expansion, and a Short Stay Levy eroding net yields. Inner-city investors have seen material compression in net rental yields (Forge Property, February 2026). For negatively geared investors, the out-of-pocket costs may no longer justify waiting for capital growth.
Current market conditions and competition
Listing competition is increasing as vendor confidence improves. Raine & Horne reported listings up nearly 40% since December 2025, with appraisals surging over 75% month-on-month into early 2026. While open for inspection attendances are up 3% year-on-year (Raine & Horne), the February and March 2026 RBA rate hikes have dampened buyer urgency (Domain).
The forecast conflict
There is significant divergence in price projections for 2026. While KPMG projects 6.6% growth, ANZ revised its forecast to -1.7% following the March 2026 rate hike. This creates a window of uncertainty where the timing of a sale could significantly impact the final result.
Frequently asked questions
When is the best time to sell to minimise CGT?
Selling in a low-income year, such as during retirement or maternity leave, can reduce the effective tax rate on the gain. If settling before 30 June 2026 in a year of lower income, the tax liability may be lower. Gains can also be split between joint owners to utilise different marginal rates.
Why are Melbourne investors selling their properties in 2026?
Many are responding to cumulative tax increases, including land tax and the congestion levy, alongside Victorian tenancy law reforms that reduce landlord flexibility. Additionally, investors who purchased between 2017 and 2020 are choosing to crystallise gains made during the COVID era despite the recent market correction.
Will Melbourne property prices recover in 2027?
Forecasts from ANZ and Domain suggest that Melbourne is likely to outperform in 2027. This recovery is expected to be supported by the ongoing structural shortage of housing and strong population growth, making holding a viable strategy for those who can sustain current holding costs.
How have recent RBA decisions affected the buyer pool?
The buyer pool improved through 2025 as rates were cut, but this has been partially reduced by the rate hikes in February and March 2026. While attendance at open for inspections remains slightly up (Raine & Horne), buyer urgency has noticeably dampened (Domain).
Questions to ask your agent
- How has the increase in listing competition in my specific corridor affected the ratio of buyers to properties over the last 90 days?
- Based on recent comparable sales, is the current buyer pool primarily consisting of owner-occupiers or other investors?
- What is the specific difference in buyer urgency we are seeing at open for inspections now compared to late 2025?
This article contains general market information based on data current as at April 2026. It does not constitute financial, legal, or real estate advice specific to your property or circumstances. For an appraisal and tailored advice, speak with a Fletchers agent in your area.