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

Melbourne is no longer a market where momentum does the heavy lifting. After years of underperformance compared with faster-growing capitals, the city is again facing softer conditions, with dwelling values down -0.8% over the month and annual growth barely positive. Yet this is not a market without depth. Melbourne still offers scale, relative affordability against Sydney, and pockets of resilience where value-focused buyers remain active, making strategy more important than ever for homeowners and sellers.

Key Takeaways

• Values have slipped 0.8% over the month and 2.3% over the quarter, confirming Melbourne is now in a weakening phase.
• Annual dwelling growth is barely positive at 0.5%, with the median value sitting at $812,621.
• Houses are under more pressure than units, falling 1.0% over the month and 2.8% over the quarter.
• Estimated home sales are down 14.2% compared with a year ago, signalling a clear pullback in buyer demand.
• Higher listings and softer auction conditions are giving buyers more choice and stronger negotiating power.
• For sellers, realistic pricing and strong presentation are becoming critical as the market becomes more selective.

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

The price story is now one of erosion rather than expansion. Melbourne dwelling values declined 0.8% in May and 2.3% over the quarter, leaving annual growth at just 0.5%. That makes it one of the weakest capital city performers, with values only marginally higher over the year and the median dwelling value sitting at $812,621.

Houses are carrying the sharper adjustment, down 1.0% over the month and 2.8% over the quarter, although they remain 0.7% higher annually with a median value of $958,361. Units have been more resilient in the short term, falling 0.4% over the month and 1.1% over the quarter, but annual growth is flat at 0.0%, with a median value of $636,769. Over the longer run, Melbourne’s performance has also been subdued, with values up only 3.3% over five years and 34.7% over the past decade.

Melbourne Property Market Trends

Beneath the headline price falls, the clearest trend is the rebalancing of power from sellers to buyers. Estimated sales are down 14.2% compared with a year ago, one of the largest declines nationally, while advertised supply has risen above average. That combination means buyers have more stock to choose from and less urgency to compete aggressively.

Rental conditions remain a counterweight to the softer sales market. Melbourne’s gross dwelling yield is around 3.9%, the highest among the major capitals, supported by rental growth of 4.7% for houses and 4.9% for units over the year. Even so, higher investor borrowing costs and rising holding expenses mean the rental yield improvement is unlikely to fully offset weaker capital growth expectations for many investors.

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

Melbourne Property Market Forecast

Looking ahead, the balance of evidence points to further softness rather than a quick rebound. The market is already showing negative monthly and quarterly growth, sales activity has fallen, and higher listing volumes are improving buyer leverage. With affordability stretched, borrowing capacity constrained and consumer confidence still under pressure, demand is likely to remain cautious.

The most likely path is a continued drift lower in values, not a sharp correction. Supply constraints, population growth and a resilient labour market should help prevent a more severe downturn, but they are unlikely to fully overcome the drag from higher interest rates, inflation risk, cost-of-living pressure and weaker investor sentiment. Conditions are likely to remain uneven across suburbs and property types, with well-priced homes still attracting interest while overpriced listings face longer selling times.

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

Melbourne is entering a more selective phase, shaped by softer price growth, weaker turnover, higher listings and ongoing affordability pressure. With values sitting -3.2% below their peak, sellers can still achieve strong outcomes, but the market is less forgiving of overpricing or weak campaign execution. The opportunity now sits with owners who read the conditions early, price with care and move with confidence rather than waiting for momentum to return on its own.

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