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

Melbourne recorded a milder September decline than Sydney, Brisbane, Adelaide and Perth, but the city remains well short of recovery. Dwelling values slipped 0.7%, extending a correction that sits within a much longer period of subdued performance.

That distinction matters: a comparatively modest monthly fall offers little assurance of a turning point when losses remain evident across both houses and units.

Key Takeaways

• Monthly losses were milder than in several other major capitals, with Melbourne dwelling values falling 0.7% in September.
• The longer correction persists, leaving dwelling values 7.5% below their March 2022 record high.
• Units held up better, recording an annual value decline of 3.8% compared with 7.3% for houses.
• Rental growth was similar across property types, with annual increases of 4.9% for houses and 4.8% for units.
• Further weakness remains likely as national financing and confidence pressures constrain demand, balanced by employment support and limited new housing supply.

Watch Cotality’s 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

Values remain 7.5% below Melbourne’s March 2022 record high and 7.2% below the more recent cyclical high of November 2025. The latest quarter brought a 3.4% decline, leaving dwelling values down 6.2% annually and 7.0% since the start of 2026.

Units have held up better than houses over the year, falling 3.8% against 7.3%. Quarterly declines were 2.2% and 3.9% respectively. The median unit value was $624,740, compared with $915,119 for houses and $780,550 across dwellings.

The longer view remains subdued, with dwelling values 5.5% lower over five years, despite a ten-year gain of 24.3%. Sunbury and Maribyrnong offered local exceptions to the annual decline, recording growth of 1.3% and 0.5% respectively. Their median values stood at $728,748 and $654,455, illustrating the variation within an otherwise weaker city market.

Melbourne Property Market Trends

Fewer fresh listings have not prevented stock accumulating across the combined capitals: new listings were down 9.2% from a year earlier, while total inventory rose 23.1%. This wider sales environment gives buyers greater choice as properties take longer to sell.

Within Melbourne’s rental market, houses and units recorded similar annual increases. House rents rose 4.9%, while unit rents increased 4.8%, showing rental growth across both property types despite their differing investment outcomes.

Units carried a gross rental yield of 5.2%, compared with 3.5% for houses. Total returns also diverged, at 1.0% for units and -4.4% for houses. These measures serve different purposes, and neither establishes net profitability. Nationally, elevated borrowing costs and expenses such as insurance, maintenance and strata fees continue to weigh on the cash flow generated by rental properties.

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

Melbourne Property Market Forecast

A smaller monthly decline does not yet signal a turning point. Further near-term weakness remains likely in Melbourne as national pressures from higher interest rates, constrained borrowing capacity and pessimistic confidence persist. Reduced investor participation nationally adds another restraint on demand, limiting the grounds for expecting a swift rebound.

There are also limits to the downside. Australia’s relatively tight labour market supports income security, while construction costs, capacity constraints and long delivery timelines restrict new housing supply. These balancing influences favour a gradual adjustment, although a deterioration in employment would weaken that support and leave demand more exposed.

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 (Reviewed September 2026):

• ANZ expects capital-city prices to decline in both 2026 and 2027. ANZ forecast coverage
• CBA expects further national price declines before a modest recovery during 2027. CBA housing outlook
• NAB forecasts lower prices across the eight capital cities in 2026. NAB Housing Monitor
• Westpac’s June forecast anticipates flat prices in 2026 and growth in 2027, although its September update warns of further downside. June Housing Pulse, September housing update

For the remainder of 2026 and into 2027, this means:

• A softer near-term outlook: The bank updates point to continued pressure on property prices, replacing the earlier expectation of broadly rising values. NAB.
• Different conditions between cities: Sydney and Melbourne face the largest forecast declines in CBA’s outlook, although weakness has also spread to Brisbane, Perth and Adelaide. CBA.
• Borrowing costs remain important: The timing and strength of any recovery depend partly on interest rates. CBA’s forecast for modest growth in 2027 assumes rate cuts during that year. CBA.
• More negotiating room for buyers: Westpac reports rising listings and expects buyers to have greater bargaining power in many markets heading into spring. This is an interpretation of market conditions, not a guarantee for individual properties. Westpac.

Conclusion

Relative resilience over a single month leaves Melbourne facing an uneven adjustment. Units have sustained smaller losses than houses, while positive annual results in selected local markets remain exceptions to the broader decline.

The city’s position is best understood as a prolonged correction with pockets of strength, rather than an established recovery across the market.

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