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

After a strong rebound from the 2022 downturn, Melbourne’s housing market has shifted into a slower phase. Values were flat over the latest month and slightly down over the past quarter, suggesting buyers and sellers are rebalancing after a period of steady recovery. Even so, annual growth remains positive, and the city continues to sit close to prior highs, indicating the market is cooling rather than reversing.

A key feature right now is segmentation. More affordable properties tend to attract deeper buyer competition, while higher price points are more sensitive to borrowing constraints and confidence swings. At the same time, vendor activity is picking up, which can relieve some supply pressure but also adds more choice for buyers and can cap short-term price momentum.

Market Highlights

• Home values were flat over the latest month, but the rolling quarter softened to -0.4%.
• The median dwelling value sits at $826,132, with annual growth still positive at 4.7%.
• Values remain close to their prior peak, sitting about 1.0% below the high reached in 2022.
• Growth over the past five years has been solid at 11.8%, though gains since the 2022 rate-hike cycle began are slightly negative (-0.5%).
• More affordable segments are generally holding up better than premium stock as serviceability pressures bite.
• New listing activity has lifted, increasing buyer choice and easing some of the tightness seen earlier in the cycle.

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 February 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 in Melbourne is best described as “positive but slowing.” Over the past 12 months, dwelling values rose 4.7%, keeping the city in recovery territory, but the near-term trend has cooled with a flat month and a negative quarter. That combination usually signals a market moving from momentum-led growth into a more balanced phase where outcomes depend more on property quality, price point, and negotiation.

Zooming out, the longer-term picture still looks constructive. Over the past five years, values increased 11.8%, which reflects the city’s resilience across multiple market cycles. However, since the previous rate-hiking cycle began in May 2022, Melbourne is slightly lower overall (-0.5%), highlighting how interest-rate settings and borrowing capacity have been major swing factors for demand.

Melbourne Property Market Trends

Conditions are increasingly shaped by affordability and credit availability. With borrowing power constrained and household confidence more sensitive to rate changes, competition tends to concentrate in the lower-to-mid price ranges, where buyers can still transact within tighter serviceability limits. This creates a market that can show “two speeds” at once: firmer demand for entry-level and good-value homes, and softer conditions for high-end properties where financing hurdles are larger.

Supply is also evolving. Total advertised stock remains relatively tight versus historical norms, but the flow of new listings has been improving, which is consistent with vendors becoming more active as the market stabilises. When fresh supply rises faster than demand, it typically shifts some negotiating power toward buyers, lengthens days on market, and keeps price growth modest unless a strong demand catalyst returns.

The table outlines Cotality’s Home Value Index as of 28th February 2026, showing peak declines, five-year growth, and changes since the the start of previous rate hiking cycle in May 2022.

Melbourne Property Market Forecast

The most likely path for Melbourne through 2026 is modest, uneven growth rather than a broad-based surge. Demand faces meaningful headwinds from affordability constraints, tighter credit at higher debt-to-income levels, and softer sentiment, all of which tend to limit how far prices can run, especially at the top end of the market.

At the same time, the downside is cushioned by still-constrained housing supply and a labour market backdrop that generally supports income security and reduces forced selling risk. If listing levels continue to lift, that should improve buyer choice and keep conditions more balanced, but it may also cap short-term growth. Overall, expectations should lean toward steady, segmented outcomes: better relative performance in more affordable pockets, with premium segments more sensitive to financing conditions.

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 transition stage, moving from recovery-driven gains into a flatter, more negotiated market. Annual growth remains positive and values are close to prior peaks, but the weaker quarterly trend is a reminder that interest rates, borrowing capacity, and confidence are now bigger drivers than pure scarcity.

For buyers, this environment can reward patience and selectivity, especially as new listings increase choice. For sellers, realistic pricing and strong presentation matter more than they did during faster-growth periods, and results are likely to vary widely by suburb, dwelling type, and price bracket.

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