Sought-after Victorian tree-change towns where house prices are on discount (2025)

A country lifestyle within two hours of Melbourne is now tens of thousands of dollars cheaper thanks to an investor exodus and a come down from feverish COVID spending.

House prices in popular regions including the Hepburn, Bass Coast and Colac Otway shires have clocked 12-month price falls, opening up the market to new tree- and sea-change buyers.

Houses in Moira Shire, which includes the towns of Cobram, Yarrawonga, Nathalia and Numurkah, declined the most, by 13.7 per cent, to a median of $457,500 in the year to March, Domain’s latest House Price Report, released on Thursday, shows.

The second-largest fall was in the Hepburn Shire, taking in Daylesford, Hepburn Springs and Trentham, where the median price dropped 10 per cent to $720,000, Domain data shows.

In the Yarriambiack Shire, covering the wheat-belt town of Warracknabeal, a 9.5 per cent drop has produced a median of only $190,000.

More than a dozen other high-profile towns and regional cities, from Ballarat to Mansfield, Warrnambool, the Macedon Ranges and the Surf Coast, recorded house prices falls of between 0.8 per cent and 6.8 per cent.

Domain’s head of research and economics, Dr Nicola Powell, describes the falls as a “correction” after pandemic-induced demand.

Regional Victoria overall recorded a 1.4 per cent fall in its median house price over the past year, to $579,000. But there are signs of stabilisation more recently, as the median is $9000 higher than three months ago.

Powell says places with the steepest declines are those which had the strong price gains when lockdown-weary Melburnians fled the city.

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“Some of these areas, including Warrnambool and the Bass Coast, were very popular during that time,” she says.

“There are two factors – supply and the easing of demand. The popularity of some of these key LGAs are perhaps not what they were during the coastal and tree-change momentum we saw.”

Numurkah agent Brett McKeown, from Gagliardi Scott Real Estate, says his market is about six months behind the pace of Melbourne.

The metro market is well below its 2021 peak, and the flow-on effect has reached his neck of the woods.

“The reason our prices have come back is purely because there is so much on the market,” he says.

“We have an abundance of houses – I have more than 55 listings.

He says the influx of listings is due to jaded investors. However, the lower price is opening the door.

“I still sell a lot to people from Melbourne – my age, early 50s and semi-retired,” McKeown says. “They sell in the city for a huge price and buy a nice house here for $600,000, chuck $1 million in the bank and play golf.”

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Agent Kim McQueen of McQueen Real Estate, who sells throughout Hepburn, says city-based buyers have been holding back, knowing they will not get the price they want for their Melbourne property.

This wait-and-see attitude has had a downward bearing on local prices.

However, active buyers have their pick of listings, boosted by tax-shy investors.

“There has been a huge correction here,” McQueen says.

“They bought during the height of COVID, paid huge prices, interest rates were nothing, and now, rates have crept up, prices have come down, and government and Airbnb taxes have increased so much, it has become impossible to make money out of these properties.

“All of that has caused a big rush onto the market of gorgeous little cottages and homes that for people were a luxury or an investment.”

However, McQueen says the anticipation of further rate cuts is whetting buyers’ appetite for a region known for food, wine and day spas.

“We are not swimming with buyers, but there is an upbeat environment out there,” she says.

KPMG director of planning and infrastructure economics Terry Rawnsley says interest rate rises have also reduced purchasing power in non-holidaymaker regions, which are more reliant on local buyers.

A new normal for sellers has emerged.

“We can describe the COVID period as a supercycle, well beyond the normal ups and downs of the property market,” Rawnsley says.

“We have come down the other side, and it is about working out what is fair value for your property, because the value now is quite different to what it was 36 months or five years ago.