Melbourne continues to recover, attracting more investors driven by high levels of value growth and rental yields across the city’s house and unit markets, according to recent reports.

According to the latest data from the PropTrack Westpac Investor Report, Melbourne accounted for 12 of the top 20 areas with the largest increases in investor enquiries from 2024 to 2025.

Across the city, Brimbank and Tullamarine-Broadmeadows rank among the most inquired-after areas in the nation.

REA Group senior economist Angus Moore said investors were more active in the Melbourne market in 2025, following a relatively quiet 2024.

“The increase in demand was partly because Melbourne was less popular with investors in 2024,” Moore said.

“Areas like Cardinia, Whittlesea, and Hobsons Bay have seen a big increase in investor interest, but the investor share of enquiries in these areas is still only around, or just above, the national average.”

According to the latest data, investors had been drawn to Victoria in droves, with total investment tipped to reach 166,345 loans by the end of 2026.

The projections would see Victoria fall just 300 short of NSW’s mark, despite having a population 1.5 million fewer.

Investor lending in Victoria rose by 21 per cent over the past year, overtaking Queensland as the nation’s second-largest investor market.

In comparison, NSW remained the leading market for investors, accounting for 31 per cent of all new investor loans nationally, reaching its highest level since 2022.

Money.com.au property expert Debbie Hays said Melbourne’s affordability had brought investors back to the Victorian capital.

“Melbourne’s relative affordability compared to other capital cities is drawing investors back, while also generating renewed interest from owner-occupiers and first home buyers,” Hays said.

“Victoria remains one of only two states yet to exceed its 2022 investor loan levels, which suggests there’s still significant room for growth as the market continues to recover.”

According to PropTrack, Coolaroo, Carrum, and Meadow Heights led the city’s house market in key investor metrics, such as price growth, rental returns and lease times.

With a median price of $625,000, Coolaroo in the city’s north-west was ranked Melbourne’s best suburb for housing investment, boasting a 14.2 per cent price growth with a 4.3 per cent yield.

PropTrack identified Melbourne’s north-west as a hotspot for investors, with four of the top 10 suburbs for houses.

Units in Melbourne’s inner ring suburbs proved to be the most attractive to investors, with five of the 10 suburbs for unit investors residing close to the CBD.

Notting Hill boasted a median value of $395,000, combined with 16.2 per cent price growth and a rental yield of 8.1 per cent.

Burwood East and Cremorne in Melbourne’s inner suburbs rounded out the top three, with investment interest driven by 17.5 per cent median growth and 6.1 per cent, respectively.

Moore said that while activity had been slower in Melbourne than in other capitals, the outlook was improving.

“Rental yields were high compared to what was typically seen in the capital, and prices recorded strong gains.”

With affordable homes, yields comparable to smaller states and solid price growth, these suburbs are in a good position to attract investors,” Moore concluded.

This article was first published on Smart Property Investment, a sister-brand of Property Buzz.