Victoria’s population is growing, but the number of new homes being built is struggling to keep pace with the state’s ambitious housing targets. For property investors, this raises an important question: where will housing demand be strongest, and which properties are best positioned to benefit over the long term?
Victoria’s housing challenges are well documented. Population growth, overseas migration, construction costs and delays in housing delivery are all contributing to pressure on the market.
While these challenges have significant implications for housing affordability, they also reinforce the importance of making informed property investment decisions.
At Turley Property Advocates, we believe the opportunity isn’t simply in buying property because Victoria is growing. It’s in understanding where demand is likely to remain strong and identifying quality properties in locations where supply is more constrained.
Victoria’s Population Has Surpassed 7 Million
According to the Australian Bureau of Statistics (ABS), Victoria’s population reached approximately 7.15 million people in March 2026, increasing by around 109,500 people over the preceding 12 months.
Much of this growth has been driven by overseas migration.
In the year to March 2026, Victoria recorded:
81,732 people added through net overseas migration.
27,677 people added through natural population increase (births less deaths).
Approximately 109,500 additional residents overall.
Overseas migration accounted for approximately 75% of the state’s annual population growth.
These figures matter because every increase in population contributes to demand for accommodation, whether through renting, purchasing or forming new households.
Importantly, demand is not evenly distributed. New residents are often drawn to areas offering employment opportunities, transport connections, education, established amenities and lifestyle benefits.
For investors, understanding where people want and can afford to live is just as important as understanding how many people are arriving.
Victoria Needs 800,000 New Homes by 2034
The Victorian Government has set a target of delivering 800,000 new homes over the decade to June 2034.
That equates to an average of 80,000 new homes every year.
However, ABS building activity figures indicate that approximately 54,800 dwellings were completed in the 12 months to March 2026.
That’s around 25,200 fewer homes than the annual construction rate required to achieve the government’s target.
In other words, Victoria would need to significantly increase its rate of housing construction to deliver the planned number of homes.
And building more homes isn’t straightforward.
High construction costs, labour shortages, development feasibility, planning requirements and infrastructure constraints can all influence how quickly new housing reaches the market.
While government initiatives are intended to increase supply, there is a difference between announcing housing targets, approving developments and completing homes that people can actually occupy.
It’s also important to distinguish between a shortfall against a construction target and an actual shortage of homes. The two measures are related, but they are not identical.
What the current figures clearly demonstrate is that Victoria faces a considerable challenge in delivering housing at the pace it has set for itself.
What Does This Mean for Melbourne’s Property Market?
When population growth increases demand for housing faster than suitable new supply becomes available, it can place upward pressure on rents and property prices.
However, this doesn’t mean every Melbourne suburb or property type will experience the same results.
Some locations may benefit from sustained demand and limited opportunities for new housing. Others may experience substantial apartment development, increasing competition between landlords and giving buyers more choice.
This is why property selection matters.
A suburb experiencing population growth isn’t automatically a strong investment location.
Investors need to consider who wants to live there, what they can afford, what type of property they prefer and how much competing housing may become available.
Why Well-Located Properties Could Be Better Positioned
We believe three factors deserve particular attention when assessing long-term property investment opportunities.
1. Established Locations With Limited Competing Supply
Established suburbs often have characteristics that are difficult to replicate.
These can include mature streetscapes, access to schools and parks, established shopping precincts, public transport and proximity to major employment centres.
In some areas, limited available land and planning constraints can restrict the delivery of competing housing.
When a desirable location has ongoing demand but relatively limited supply, well-selected properties may be better positioned to maintain their appeal to both tenants and future purchasers.
Of course, planning changes and redevelopment opportunities can alter supply over time, so understanding the local development pipeline remains essential.
2. Locations That Attract Both Tenants and Owner-Occupiers
A property investment should ideally appeal to more than one segment of the market.
Properties in convenient, established neighbourhoods may attract young professionals, families, downsizers and owner-occupiers, depending on the property type and local demographics.
This broad appeal can be particularly valuable when it comes time to lease or sell.
Rather than relying solely on investor demand, a property with strong owner-occupier appeal has access to a wider potential buyer pool.
That can be an important consideration for long-term capital growth.
3. Buying the Right Property, Not Just the Right Suburb
Even within a highly desirable suburb, not all properties make equally good investments.
Street position, land characteristics, floor plan, condition, orientation, property type and purchase price can all influence future performance.
Two properties located only a few streets apart can deliver very different investment outcomes.
This is why research needs to go beyond suburb-level growth statistics.
A quality investment decision considers the individual property, its market position, local supply, rental prospects and potential resale appeal.
Population Growth Creates Demand, but It Doesn’t Guarantee Capital Growth
It’s tempting to assume that a growing population and housing supply challenges automatically mean property prices will rise.
The reality is more complex.
Interest rates, borrowing capacity, household incomes, employment conditions, government policy and affordability all influence property prices.
Strong rental demand doesn’t necessarily translate into immediate capital growth, particularly when purchasers are constrained by borrowing costs or affordability.
Similarly, an increase in housing supply doesn’t automatically make a suburb unattractive. Well-planned development can improve infrastructure, amenities and the overall appeal of a neighbourhood.
The key is to understand how these factors interact in the specific location and property being considered.
For investors, the objective should be to identify properties supported by sustainable demand, sound fundamentals and a purchase price that makes financial sense.
The Opportunity for Long-Term Property Investors
Victoria’s population growth and housing construction challenges provide an important backdrop for long-term property investment.
With more than 7 million residents, continued overseas migration and an ambitious housing construction program that requires a substantial increase in delivery, demand for suitable housing will remain a critical issue.
But the investment opportunity is not simply about the number of people moving to Victoria.
It’s about identifying where people want to live, where housing is difficult to replicate and which properties have the characteristics to remain desirable over time.
For investors who take a considered, research-led approach, these fundamentals can help guide smarter purchasing decisions.
The Turley Property Advocates Approach
At Turley Property Advocates, we help clients look beyond the headlines and focus on what makes an individual property a sound long-term investment.
Our approach considers location, market demand, competing supply, property quality, buyer appeal and purchase price.
We understand that buying an investment property is a significant financial decision. Our role is to help clients make that decision with confidence, backed by independent research and professional advice.
Victoria’s population is growing, and meeting its housing needs will remain a major challenge. For property investors, the question isn’t simply whether there will be demand for housing. It’s whether the property they purchase is well positioned to attract that demand.
If you’re considering purchasing an investment property in Melbourne, Turley Property Advocates can help you identify opportunities aligned with your investment goals and long-term strategy.
Contact Turley Property Advocates to discuss your next property purchase.