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

Melbourne’s property market has reached a crossroads: values are retreating, yet affordability and local performance remain uneven. With dwelling values down 4.7% over the year to August, the city is under greater pressure than most capitals, making careful pricing essential.

For homeowners, the softness affects equity and refinancing confidence; for sellers, it changes competition, timing and negotiation. The picture is not uniformly negative, however, so understanding the forces beneath the headline is critical.

Key Takeaways

• The 4.7% annual decline left Melbourne dwelling values under greater pressure than most capitals.
• The market benchmark is $786,718, with houses at $920,432 and units at $629,054.
• The segment gap shows houses declining faster than units, while several outer and western areas remain positive.
• A buyer advantage is emerging as stock accumulates, selling times lengthen and clearance rates remain below 50%.
• The near-term outlook points to further softness, although limited new housing supply should restrain the downturn.

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

Momentum has turned decisively negative. Melbourne dwelling values fell 1.1% in August, 3.9% over the three months to August and 4.7% across the year. Year to date, the broader measure is down 6.3%. The index is 6.8% below its March 2022 peak, while values have declined 3.9% over five years but remain 26.6% higher over ten years.

That weakness is sharper for houses: values dropped 1.4% in August and 5.7% annually, versus 0.5% and 2.5% for units. Median values stand at $920,432 for houses, $629,054 for units and $786,718 across all dwellings. Local results diverge, led by Sunbury at 2.7% annual growth, while Melbourne City was down 0.9%.

Melbourne Property Market Trends

Selling conditions have shifted firmly toward buyers. Across the capitals, advertised stock in the four weeks to August 30 was 24% above a year earlier and 8% above the five-year average, despite fewer new listings. Longer selling times, wider discounts and clearance rates generally below 50% are increasing purchaser choice and leverage.

Rental conditions are more resilient. Melbourne house rents rose 5.1% over the year and unit rents 4.9%, while the gross dwelling yield reached 4.0%. Falling values and rising rents are lifting yields, but elevated interest and holding costs still make neutral cash flow difficult for many investors.

Affordability, reduced borrowing capacity and weak confidence are suppressing activity. Spring could bring a smaller-than-usual listings lift as some vendors delay testing a soft market, limiting fresh supply even while older stock accumulates.

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

Melbourne Property Market Forecast

Over the next few months, Melbourne values are likely to soften further. Elevated mortgage rates, possible monetary tightening, pessimistic sentiment and weaker real wages should restrain borrowing capacity and buyer demand; clearance rates below 50% across most capital-city markets reinforce the cautious outlook.

The decline should remain contained. Low new-housing supply, relatively low unemployment and first-home-buyer support provide a floor, while a subdued spring listings lift could keep stock from accelerating sharply. Sellers should expect selective demand and persistent price sensitivity.

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

For homeowners and sellers, positioning now matters more than waiting for a broad market upswing. Limited construction offers some protection, but financing pressure and cautious buyers remain the dominant forces. Owners should assess their equity calmly; sellers should price to current comparable evidence, present well and allow room for negotiation.

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