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

Melbourne’s housing market is showing a flatter, more cautious profile after earlier expectations of steady growth. Dwelling values were unchanged over the month and down 0.4 per cent over the quarter, with the median dwelling value sitting at $826,132. Conditions are being shaped by higher borrowing costs, softer buyer sentiment, more motivated vendors and an increase in new listings, while slower overseas migration is also easing one of Melbourne’s traditional demand drivers.

The market is not moving evenly. More affordable properties continue to attract stronger competition from first home buyers, investors and other budget-conscious buyers, while the mid-to-upper segments, including family upgrader homes and prestige property, are softer and more selective. For sellers, this means presentation, pricing and property quality matter more than they did in stronger phases of the cycle. For buyers, the market is offering more room to negotiate, especially outside A-grade stock, while well-located entry-level homes and units remain competitive. The following sections cover price growth, current trends, the market forecast and what this means overall.

Key Takeaways

• Melbourne dwelling values were flat over the month and down 0.4 per cent over the quarter, with a median value of $826,132.
• Annual dwelling growth remains positive at 4.7 per cent, but momentum has slowed compared with stronger mid-sized capitals.
• Freshly advertised stock in Melbourne was almost 12 per cent above the five-year average, giving buyers more choice and putting pressure on vendors.
• Houses and units are both positioned at the start of recovery on the property clock, suggesting the market is not falling sharply but is still fragile.
• Prestige property above $5 million is stable but buyer-favoured, with A-grade homes performing best and B/C-grade homes taking longer to sell.
• Affordable units and renovator houses in desirable suburbs remain key entry points for buyers priced out of premium house markets.

See how Melbourne’s property values have performed across houses and units over various timeframes, along with returns, yields, and median prices.

Watch Cotality’s April 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

Price growth has slowed noticeably, with Melbourne recording 0.0 per cent monthly growth and a 0.4 per cent quarterly decline. Even so, the market is still up 4.7 per cent annually, showing that the broader trend has not reversed entirely, but the pace of gains has flattened.

The median dwelling value of $826,132 keeps Melbourne among the more affordable capital city markets compared with Sydney, Brisbane, Adelaide and Perth. However, affordability varies sharply by property type and location. In sought-after northern suburbs such as Fitzroy North and Northcote, median house values around $1.73 million sit more than 100 per cent above the broader Melbourne median, while unit values in some of these same locations remain much more accessible.

Melbourne Property Market Trends

A more selective market is emerging. Buyers are still active, particularly at lower price points, but they are cautious and value-focused. Increased listing activity is also changing the balance, with Melbourne’s new listings almost 12 per cent above the five-year average. This gives buyers more choice and means sellers need to be realistic on price, especially where a property has location, condition or presentation drawbacks.

There is also a clear split between property grades and price brackets. In the prestige market above $5 million, conditions remain stable but buyer-favoured, with the strongest demand focused on scarce, well-located, turnkey homes in suburbs such as Toorak, Malvern, Armadale, Hawthorn and Kooyong. A-grade properties are still achieving strong results, while B/C-grade homes are seeing longer campaigns and greater discounting. At the entry level, buyers are using apartments, townhouses and renovator homes to access high-demand suburbs without paying premium house prices.

The table outlines CoreLogic’s Home Value Index as of 1st May 2026, providing a snapshot of housing value performance across key indicators.

Melbourne Property Market Forecast

The likely direction for Melbourne is a balanced but softer market in the near term, rather than a broad-based fall. The city’s houses and units are both sitting at the start of recovery, but recent data points to flat values, easing demand and more motivated sellers. Higher interest rate expectations, weaker sentiment and slower population growth are likely to keep a lid on price momentum.

The strongest support will continue to come from affordability-led demand and limited access to quality stock in established suburbs. Lower-priced properties should remain relatively resilient because first home buyers, investors and other buyers are competing in this segment. By contrast, the higher end of the market is expected to remain more selective, with buyers paying well for premium homes but negotiating harder on properties that need work, lack standout features or are priced ahead of the market.

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’s market is steady but cautious, with positive annual growth sitting alongside flat short-term performance. Higher borrowing costs, weaker confidence, increased listings and slower migration are weighing on momentum, while affordability pressures are keeping demand concentrated in lower price brackets.

For sellers, the best outcomes are likely to come from realistic pricing, strong presentation and a clear understanding of how their property compares with competing stock. For buyers, conditions are more favourable than during hotter phases of the cycle, particularly in the mid-to-upper market, although affordable homes and units in well-located suburbs can still attract strong competition. Overall, Melbourne remains a market where property type, price bracket, location and quality will heavily influence results.

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