Melbourne Property Market – Prices, Trends, Forecast [July 2026]

Sydney’s property market has moved from resilience to retreat, with price falls now clearly outweighing the modest annual gain still showing in the data. Dwelling values are down 1.2% over the month and 3.2% over the quarter, making Sydney one of the clearest examples of the broader capital-city slowdown. Even so, the market remains expensive, with a median dwelling value of $1,265,608, so conditions are shifting rather than collapsing.

Key Takeaways

• Sydney dwelling values fell 1.2% in the month and 3.2% over the quarter, showing a clear loss of momentum.
• Annual growth is still slightly positive at 0.3%, but recent declines suggest sellers are facing a softer market than earlier in the year.
• Houses are under more pressure than units, with house values down 3.8% over the quarter compared with 1.8% for units.
• Sydney’s median dwelling value remains high at $1,265,608, with houses at $1,556,258 and units at $898,623.
• Rental conditions remain supportive, with gross yields at 3.3% for dwellings, while unit yields are stronger at 4.3%.
• For sellers, pricing discipline is becoming more important as buyers gain more choice and less urgency.

Watch Cotality’s June 2026 Housing Market Update for expert commentary on national and capital city housing trends, price movements, and key market drivers across Melbourne.

Melbourne Property Price Growth

Recent price growth has turned negative across Sydney’s market. Dwelling values declined 1.2% in the latest month, 3.2% over the quarter, and are now 3.7% below their January 2026 peak. The annual figure is still just positive at 0.3%, but the sharper short-term falls show that the market has weakened quickly.

Houses are carrying the larger share of the downturn. Sydney house values fell 1.5% over the month and 3.8% over the quarter, with annual growth slipping to -0.1%. Units have held up better, falling 0.6% over the month and 1.8% over the quarter, while still recording 1.1% annual growth.

Melbourne Property Market Trends

The key trend is a shift in negotiating power. Sydney’s weaker quarterly result sits alongside broader capital-city softness, lower clearance rates, rising advertised supply, and reduced buyer urgency. For homeowners preparing to sell, this means the market is becoming more price-sensitive, particularly in higher-value segments.

There is still depth in the market, but buyers are becoming more selective. Sydney remains Australia’s highest-value capital city market, and its rental profile remains strong, with median weekly rents of about $883 for houses and $783 for units. That rental support is helping to cushion demand, especially for well-located units, but it is not enough to fully offset affordability pressures and tighter borrowing conditions.

The table highlights housing value trends across capital city, regional, and national markets.

Melbourne Property Market Forecast

The likely direction for Sydney is continued softness in the near term, with values more likely to drift lower than rebound quickly. The strongest evidence is in the short-term momentum: a 3.2% quarterly fall, a 1.2% monthly decline, and house values falling faster than units. These figures point to a market where demand has cooled and sellers need to meet buyers closer to current conditions.

Several factors are shaping the outlook. Affordability remains stretched, interest rate settings are still restrictive, and buyer confidence is weak. At the same time, low new housing supply, population growth, and tight rental conditions should help limit the downside. That combination suggests a more cautious market, not a severe correction, with units likely to remain relatively better supported than houses due to lower entry prices and stronger yields.

The Reserve Bank of Australia’s ongoing adjustments to interest rates will likely play a crucial role in shaping market dynamics, as higher borrowing costs limit purchasing power for many buyers.

Here are some of the most recent forecasts by the big-4 banks in Australia:

• ANZ predicts a 5-6% increase in capital city property prices in 2024, with Brisbane expected to see the highest rise at 9-10%, Perth property values could go up by 1-11%, Sydney by 4-5%, and Melbourne prices by 2-3%.
• CBA forecasts a 5% rise in capital city prices, with some variations: Brisbane is anticipated to grow by 6%, Melbourne and Perth by 5%, Sydney by 4%, and Adelaide by 1%.
• NAB projects a 5.4% average increase across the capitals, with Brisbane expected to see a 6.5% rise, Perth and Adelaide by 6.2%, Melbourne by 5.5%, Sydney by 5%, and Hobart remaining flat.
• Westpac expects a 6% growth across the combined capitals, with Perth leading at 10%, followed by Brisbane at 8%, Sydney at 6%, Adelaide at 4%, and Melbourne at 3%

Oxford Economics recently released property forecasts predicting where house prices will be in three years.

Conclusion

Sydney’s housing market is entering a more challenging phase, led by falling quarterly values, affordability pressure, and softer buyer demand. The fundamentals are not broken, but the balance has shifted toward buyers, especially where stock levels are higher or price expectations have not adjusted.

For sellers, the message is simple: the market is still active, but success now depends on realistic pricing, strong presentation, and moving before momentum weakens further.

Next steps