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

Melbourne’s market has definitely cooled off. Prices are still up a little over the year, but the recent numbers tell a softer story, especially for houses. Buyers have a bit more room to move, sellers are having to be more careful with pricing, and the market feels less rushed than it did during stronger parts of the cycle. The main thing to watch from here is price growth, because that’s where the change in momentum is showing up most clearly.

Key Takeaways

• Melbourne dwelling values are down 0.6% over the month and 1.5% over the quarter.
• Prices are still 2.0% higher over the year, so this is more of a slowdown than a full reversal.
• The median dwelling value is $822,969, with houses at $972,734 and units at $641,690.
• Melbourne is still 2.3% below its March 2022 peak.
• Houses are looking softer than units, with house values down 2.1% over the quarter compared with a 0.2% fall for units.
• Rental returns are holding up better, with dwelling gross yields at 3.8% and unit yields at 4.9%.

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

The short-term numbers are where the weakness shows up. Dwelling values fell 0.6% in the month and 1.5% across the quarter, while year-to-date values are down 1.7%. Even so, Melbourne is still sitting 2.0% higher than a year ago, which keeps the market in positive territory on an annual view.

Houses have taken the bigger hit. House values dropped 0.8% over the month and 2.1% over the quarter, though they are still up 2.5% annually. Units have been steadier, with a 0.1% monthly fall and a 0.2% quarterly fall, plus 0.9% annual growth. Median values now sit at $972,734 for houses and $641,690 for units.

Melbourne Property Market Trends

This is not really a hot seller’s market right now. More listings and softer buyer demand mean people shopping around have more choice, and that takes some of the urgency out of the process. For sellers, it means the market is less forgiving if the price is too ambitious.

The stronger pockets are mostly in more affordable areas. Frankston, Sunbury and Brimbank recorded annual growth of 9.0%, 8.9% and 8.0%, which says a lot about where demand is still holding up. Buyers are still active, but they are clearly more price-conscious.

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

Melbourne Property Market Forecast

The likely path from here is a bit more softness, or at least a fairly subdued market, rather than a dramatic fall. Affordability is stretched, borrowing capacity is tighter, sentiment has weakened, and higher interest rates are making buyers more cautious. Melbourne’s recent quarterly decline already reflects a lot of that pressure.

There are still some supports underneath the market, though. Rental demand remains firm, new housing supply is still not keeping up with underlying need, and employment conditions are helping limit forced selling. That mix should stop conditions from getting too weak, but it also means performance will probably stay patchy. Well-priced homes in more affordable suburbs should hold up better than expensive properties where the buyer pool is thinner.

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 in a cooler, more careful phase. Prices are not falling sharply, but the pace has clearly come off and buyers have more leverage than they did before. For homeowners and sellers, the big factors are still affordability, borrowing conditions, stock levels and rental demand.

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