New data shows that population trends are starting to shift in one state, with more Australians and migrants choosing to settle there. Home and rent prices may be a a major drawcard.

According to the latest national, state and territory population data from the Australian Bureau of Statistics, Australia's population grew by 2.3% annually in the year ending March 2024.

While every state and territory experienced population growth over the period, Victoria and Western Australia had the largest growth rate at 2.7% and 3.1% respectively. Victoria achieved the largest absolute increase in population, with an addition of 184,000 people.

In Victoria, net interstate migration, although lower than pre-pandemic averages, was positive for the first time since September 2021, reflecting early signs of Australians moving to our second largest state.

Currently, the median home value in Victoria is lower than that in New South Wales, Queensland, and the Australian Capital Territory, and is comparable to the median home value in South Australia and Western Australia.

Victoria also stands out as the only major state to experience a decline in home prices in the past year, according to PropTrack's Home Price Index. Melbourne home prices have decreased by 1.46% annually, while Regional Victoria home prices have fallen by 1.74%.

With housing affordability at an historic low, the lower comparative cost of homes in Victoria may be increasingly appealing to Australians seeking more affordable options.

Although the growth in population is in part due to positive net interstate migration, a larger share is driven by overseas migration. Overseas migration accounted for 84% of population growth in Victoria in the year ending March 2024.

One key factor in this strong overseas migration trend is likely Victoria's competitive rent prices.

Migration into Victoria has been strong over the past year. Picture: Getty

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While Victoria is the second largest state in terms of population, its median advertised weekly rent was just $550, which was lower or equal to every state except Tasmania.

As a large proportion of overseas migrants tend to rent upon their arrival in Australia, rent prices may be a deciding factor in where they choose to live.

This may be contributing to high overseas migration numbers into Victoria.

While the relative cost of buying or renting a home may be attracting people to Victoria, the state also has a diverse economy with a range of industries such manufacturing, financial services and healthcare and social assistance contributing to the total Gross Value Added (GVA).

Additionally, it is home to Australia's number one ranked university (University of Melbourne) and largest University (Monash University).

These factors may be drawing in prospective interstate migrants who are motivated by strong job prospects and overseas migrants who are seeking high-quality education.

Forecasts indicate that Victoria's population will rise by 0.7% to 1.5% annually for the next 50 years, more than the national average and the highest of any state. Melbourne is also forecast to overtake Sydney as the most populous capital city in Australia in the next 10-15 years.

More insights from the expert team at PropTrack

While new home completion rates are more closely aligned with population growth in Victoria compared to other states, resulting in a moderation of home prices, rent prices are expected to follow a contrasting trend.

At the start of the year, taxes for investors increased in Victoria with those owning a second home expected to pay a new land tax. The surcharge applied to property owners who did not live in their property also doubled, leading to more investors selling than buying.

Although Victoria is currently an enticing option for overseas and interstate migrants due to lower housing costs and its diverse economy, if investors continue to withdraw there may be major repercussions to the rental market. This may cause a shift in future population trends.