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

More than four years after its last peak, Melbourne’s housing market remains 6.8% below the high reached in March 2022. That persistent shortfall makes the current downturn part of a longer stretch of underperformance rather than a sudden reversal from fresh records.

Relative affordability has widened against some capitals, but lower entry values have not translated into renewed growth leadership. Melbourne therefore begins the next market phase with subdued momentum already entrenched.

Key Takeaways

• Prolonged underperformance continues, with dwelling values 6.8% below their March 2022 peak and 3.9% lower over five years.
• Houses bore the heavier decline, falling 5.7% annually compared with 2.5% for units.
• Local growth remained limited, as Sunbury rose 2.7% while the bottom six published areas were flat or negative.
• Rental movement was steadier, with house and unit rents increasing 5.1% and 4.9%, respectively.
• Further weakness appears likely, although insufficient national housing supply should restrict the correction’s depth.

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

Houses carry the deeper share of Melbourne’s decline, falling 5.7% annually and 4.6% through the quarter. Units fell 2.5% annually and 2.4% quarterly, showing relative resilience rather than growth. Across all dwellings, values declined 1.1% in August and 4.7% over the year.

The median dwelling value stood at $786,718, comprising $920,432 for houses and $629,054 for units. Both types moved backwards over every measured period, although smaller unit declines created a clear performance advantage over detached housing.

Time offers little relief to the broader picture. Dwelling values were 3.9% lower over five years, the weakest result among capitals, although the 10-year change remained positive at 26.6%. Locally, Sunbury led the published high-growth SA3s at 2.7%; Melton–Bacchus Marsh was flat, and the remaining five ranked areas recorded declines.

Melbourne Property Market Trends

Across the combined capitals, elevated supply and slower selling framed the broader environment. Advertised stock sat 24% above a year earlier, while most capitals recorded longer selling times, larger discounts and auction clearance rates below 50%. These conditions created greater leverage for buyers, although they are capital-wide indicators rather than Melbourne-specific measures.

Rental movement was steadier than values. House rents increased 5.1% over the year, closely followed by units at 4.9%. The narrow gap shows similar growth across both property types and a more consistent income trend than their divergent value declines.

Yield differences sharpened the property-type contrast. Melbourne’s gross dwelling rental yield was 4.0%, with units at 5.1% and houses at 3.5%. Investors nationally are expected to place greater emphasis on higher-yield opportunities, making the unit segment more relevant, although national analysis indicates rental income generally remains insufficient to offset holding costs.

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

Melbourne Property Market Forecast

Starting from a prolonged period of underperformance, Melbourne is likely to face further downward pressure in the near term. Nationally, higher rate risk, falling real wages, pessimistic sentiment, a gradually loosening labour market and normalised population growth are expected to restrain housing demand. Melbourne’s existing annual and quarterly declines make it especially exposed to that softer backdrop.

The correction should still encounter limits. New housing supply remains insufficient nationally because construction costs, capacity constraints and feasibility challenges continue to restrict delivery, while relatively low unemployment should reduce the risk of widespread distressed selling. First-home buyer support may also assist the more affordable end, pointing to continued weakness rather than an uncontrolled fall.

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

At $786,718, Melbourne’s median dwelling value sits well below Sydney and Brisbane, but that relative affordability has not restored momentum. Persistent house weakness and restrained local gains continue to define the market.

Melbourne will remain a test of whether relative affordability can overcome entrenched weakness across a major capital during the next housing cycle.

Next steps