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

Melbourne’s housing market is losing ground from an already weakened position, with dwelling values 7.3% below their level five years ago. Recent declines deepen a prolonged setback across houses and units.

Lower values have not removed the wider constraints on demand. High mortgage costs and subdued confidence nationally create a difficult setting for recovery, even as Melbourne’s units hold up better than its houses.

Key Takeaways

• Longstanding weakness has left Melbourne dwelling values 7.3% below their level five years earlier.
• Local declines extend to Melbourne City, the strongest qualifying statistical area by annual performance, where values fell 0.3%.
• House values dropped 8.9% over the year to October, compared with 4.8% for units.
• Rental yields stand at 5.2% for units and 3.6% for houses, while rents are higher than a year ago.
• Demand pressures favour further near-term price easing, with subdued national confidence and borrowing constraints weighing on the outlook.

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

The retreat from Melbourne’s March 2022 peak has reached 8.2%. October 2026 brought a further 0.8% fall, taking the decline over the latest quarter to 2.7% and the annual decrease to 7.6%. Across all dwellings, the median estimated value stood at $773,027 at October’s end.

Houses recorded an 8.9% annual decline and a median value of $906,067, while units fell 4.8%, with a median of $620,996. Quarterly losses were 3.2% for houses and 1.6% for units, showing the heavier impact on the house market.

A five-year decline of 7.3% contrasts with 21.9% growth over ten years. Within Greater Melbourne, the Melbourne City statistical area recorded a 0.3% annual fall, the strongest result among qualifying areas. Sunbury declined 0.7%, while Cardinia was down 4.2%, illustrating different degrees of weakness across the city.

Melbourne Property Market Trends

Accumulating advertised stock characterises the broader capital-city selling environment. Listings are at their highest level for this time of year since 2019 despite fewer new listings than average, reflecting slower sales. Combined-capital auction clearance rates have consistently stayed below 50%.

Melbourne rents increased 4.4% for houses and 4.6% for units over the year to October. Vacancy rates were also higher than a year earlier, so rising rents have continued alongside a greater proportion of rental properties standing vacant.

Investment income differs by property type, with gross yields of 5.2% for units and 3.6% for houses before ownership and financing costs. They express annual rent as a proportion of property value. Nationally, new investor loan commitments fell 8.6% in the June quarter. That broader retreat in lending highlights pressure on investment demand despite continuing rental growth.

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

Melbourne Property Market Forecast

Softening national employment conditions add to the case for further price declines in Melbourne over coming months. Unemployment across Australia reached 4.7% in September, raising risks to income growth and confidence. High mortgage costs and reduced borrowing capacity are also likely to keep demand subdued.

Constraints on new construction should help limit the national downturn. High development costs, capacity limits and lengthy project timelines restrict completions, while continuing population growth sustains underlying demand. Those supports temper the outlook, but Melbourne’s recent losses and broader demand pressures suggest a gradual decline is the most likely near-term path.

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.

For regional Victoria, see our Geelong property market update.

Conclusion

Persistent losses across houses and units leave Melbourne with substantial ground to recover. Smaller unit declines soften the picture, but the city’s weak longer-term record remains its defining feature.

Rising rents provide income support while demand remains constrained. Melbourne’s wider market is still working through an extended adjustment, with renewed price growth yet to emerge.

Next steps