The decision to sell your Melbourne investment property now or hold until 2026 is finely balanced. While Melbourne’s price recovery is underway, recent RBA rate hikes have introduced caution into the market, dampening buyer urgency (Domain). Vendor confidence remains elevated, but rising listed stock competition means selling now may yield a stronger result than waiting, particularly given Victoria’s increasing property tax burden.
Melbourne’s property market is currently navigating a period of uncertainty. The late 2025 surge in vendor confidence, evidenced by record sales at Woodards Real Estate and a 75% month-on-month increase in appraisals at Raine & Horne into early 2026, has been tempered by the February and March 2026 RBA rate increases. This creates a complex environment for investment property owners considering their options.
What’s happening with property prices in Melbourne?
Melbourne’s price recovery is underway, but forecasts are diverging. KPMG projects 6.6% house price growth for 2026, however ANZ revised its forecast to -1.7% following the March 2026 rate hike, highlighting significant uncertainty (ANZ). While long-run structural drivers – chronic undersupply, population growth, and tight rental vacancies – support medium-term value appreciation, short-term volatility is likely.
Should I be concerned about rising taxes?
Victoria’s property tax environment is a key consideration for investors. The cumulative effect of land tax rises, the expansion of the VRLT, congestion levies, the Short Stay Levy, and absentee owner surcharges is creating a heavier tax burden than any other state in Australia (Forge Property, February 2026). This erosion of net yields, combined with potential future increases, is driving some investors to divest.
What’s the impact of interest rates on my investment?
The RBA’s rate rises in 2022-2023 pushed many negatively geared investors into unsustainable negative cash flow. While rate cuts in 2025 briefly improved conditions, the recent hikes have reintroduced financial pressure. If your property is negatively geared, the ongoing out-of-pocket costs may not justify waiting for further capital growth. Conversely, positively geared or near-neutral properties offer some buffer against holding costs.
The timing risk
The biggest challenge is accurately predicting the trajectory of interest rates and their impact on buyer sentiment. While Melbourne is forecast to outperform in 2027 (ANZ, Domain), this relies on a stabilisation or reduction in rates. The current volatility makes it difficult to confidently time the market, and attempting to do so carries inherent risk.
Frequently asked questions
What if I’m worried about Capital Gains Tax?
Deferring settlement to the next financial year, or selling in a low-income year, can minimise your CGT liability. You can also offset gains with existing capital losses and split the gain between joint owners, each reporting 50% at their marginal rate. Remember to keep records for five years after lodging your tax return.
I bought my property in 2018 – is now a good time to realise the gains?
Many investors who purchased between 2017 and 2020 still hold substantial gains despite the recent market correction. Crystallising these gains now, particularly before potential tax increases, may be prudent. The current market offers a window to capitalise on COVID-era growth.
How does the Victorian rental market affect my decision?
Tight rental vacancies support property values, but net rental yields in Melbourne, particularly in inner-city areas, have been compressed (Forge Property, February 2026). This, combined with increasing operating costs and taxes, is reducing the profitability of investment properties and prompting some investors to sell.
What’s happening with listing volumes?
Listed stock competition is rising as more vendors gain confidence. Raine & Horne reported listings up nearly 40% since December 2025, with appraisals surging over 75% month-on-month into early 2026. Increased competition means your property needs to stand out to attract buyers and achieve the best possible price.
Questions to ask your agent
- Based on recent comparable sales in my area, what is the likely price range for my property *today*?
- Can you provide a detailed breakdown of the marketing campaign you recommend, and how it will maximise exposure to qualified buyers?
- What is your assessment of the current buyer pool for properties like mine – are they primarily investors, first-home buyers, or downsizers?
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.
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