Is now a good time to buy a property in Melbourne? (January 2026)

Authored by the expert who managed and guided the team behind the Australia Property Pack

Yes, the analysis of Melbourne's property market is included in our pack

Is it smart to buy now in Melbourne, or should I wait as of 2026?

Do real estate prices look too high in Melbourne as of 2026?

As of January 2026, Melbourne property prices are elevated but not in bubble territory, with the median house price sitting around $980,000 to $1,000,000 and units around $640,000 according to Cotality data, which is close to but still slightly below the city's prior record high.

One clear signal that supports this assessment is the vendor discount rate, which sits at around 2.8% in Melbourne, meaning sellers are getting reasonably close to their asking prices and not having to slash prices dramatically to secure buyers.

Another supporting indicator is the median days on market, which hovers around 30 to 33 days in Melbourne, suggesting properties are selling at a steady pace rather than languishing unsold for months, which would indicate overpricing.

You can also read our latest update regarding the housing prices in Melbourne.

Does a property price drop look likely in Melbourne as of 2026?

As of January 2026, the likelihood of a meaningful property price decline in Melbourne over the next 12 months appears low, primarily because lending standards remain tight and there is no sign of forced selling on a large scale.

The plausible price change range for Melbourne over the next 12 months sits between minus 3% on the downside and plus 7% on the upside, with most forecasters leaning toward modest growth rather than decline.

The single most important macro factor that could increase the odds of a price drop in Melbourne would be a significant rise in unemployment, which would squeeze household budgets and potentially trigger distressed sales.

However, this scenario appears unlikely in the near term because Australian unemployment remains low and the labor market has been resilient, with no major layoff waves forecast for early 2026.

Finally, please note that we cover the price trends for next year in our pack about the property market in Melbourne.

Could property prices jump again in Melbourne as of 2026?

As of January 2026, the likelihood of a renewed price surge in Melbourne within the next 12 months is medium to high, with several forecasters including KPMG predicting Melbourne will be the best-performing Australian capital city in 2026.

The plausible upside price change range for Melbourne over the next 12 months could reach 5% to 7% for houses and up to 7% for units, based on forecasts from KPMG and Domain research.

The single biggest demand-side trigger that could drive prices to jump again in Melbourne is further interest rate cuts by the Reserve Bank, which would boost borrowing capacity and bring more buyers off the sidelines.

Please also note that we regularly publish and update real estate price forecasts for Melbourne here.

Are we in a buyer or a seller market in Melbourne as of 2026?

As of January 2026, Melbourne's property market is best described as balanced to slightly seller-leaning, with enough buyer demand to support prices but not so much that bidding wars are the norm across all segments.

The estimated months of inventory in Melbourne sits around 3 to 4 months based on current listing volumes and sales rates, which is generally considered balanced because below 3 months typically favors sellers while above 6 months favors buyers.

The share of listings with price reductions in Melbourne remains moderate, with vendor discounts averaging around 2.8%, which suggests sellers still have reasonable leverage but are not entirely dictating terms.

Are homes overpriced, or fairly priced in Melbourne as of 2026?

Are homes overpriced versus rents or versus incomes in Melbourne as of 2026?

As of January 2026, Melbourne homes appear moderately overpriced when comparing purchase costs to rents, but the stretch is less extreme than in cities like Sydney, making Melbourne relatively more accessible for buyers who want both a home and reasonable rental backup options.

The estimated price-to-rent ratio in Melbourne suggests gross rental yields of around 3.4% for dwellings, which is below the 4% to 5% range often considered healthy for a balanced market, indicating prices have run ahead of rents.

The estimated price-to-income multiple in Melbourne sits around 7 to 9 times median household income for houses and around 4 to 5 times for units, which remains stretched compared to the historical benchmark of 3 to 5 times that was common in earlier decades.

Finally please note that you will have all the indicators you need in our property pack covering the real estate market in Melbourne.

Are home prices above the long-term average in Melbourne as of 2026?

As of January 2026, Melbourne dwelling values are above their long-term average in nominal terms but still sit approximately 0.9% below their prior record peak, meaning prices have recovered substantially but have not yet broken new ground.

The estimated recent 12-month price change in Melbourne is around 3% to 4% growth, which is more subdued than the pre-pandemic boom years but represents a return to positive momentum after the flat-to-declining period of 2022 to 2024.

In inflation-adjusted terms, Melbourne prices are likely still below their cycle peak because consumer prices have risen substantially since 2021, meaning the real purchasing power required to buy a Melbourne home has not fully recovered to previous extremes.

What local changes could move prices in Melbourne as of 2026?

Are big infrastructure projects coming to Melbourne as of 2026?

As of January 2026, the single biggest infrastructure project impacting Melbourne property prices is the Metro Tunnel, which opened in late 2025 and will see its full network integration (the "Big Switch") on 1 February 2026, significantly improving CBD access for suburbs along the new line.

The Metro Tunnel is already operational with free weekend travel through early 2026, and the full timetable integration lands on 1 February 2026, meaning this is not a future promise but a current reality that will immediately affect commute times and suburb desirability.

Additionally, the Suburban Rail Loop East is actively under construction at all six station sites from Cheltenham to Box Hill, with works progressing as of late 2025, which will reshape accessibility in Melbourne's southeast corridor over the coming years.

For the latest updates on the local projects, you can read our property market analysis about Melbourne here.

Are zoning or building rules changing in Melbourne as of 2026?

The single most important zoning and building rule change being discussed in Melbourne is the Housing Statement Reform, which aims to streamline planning approvals and encourage more medium-density housing in established suburbs.

As of January 2026, the net effect of these zoning and building rule changes on Melbourne prices is likely to be modest in the short term, because while faster approvals could increase supply, the binding constraints remain construction costs, labor shortages, and project feasibility rather than planning delays alone.

The types of areas most affected by these rule changes in Melbourne are middle-ring suburbs with good transport links, such as those along the new Metro Tunnel line and existing train corridors, where increased density is most likely to be approved and built.

Are foreign-buyer or mortgage rules changing in Melbourne as of 2026?

As of January 2026, foreign-buyer rules in Melbourne have tightened significantly with a temporary ban on foreign purchases of established dwellings running from April 2025 to March 2027, which removes one source of demand at the margin but is unlikely to dramatically shift prices given that foreign buyers were already a small share of the market.

The most significant foreign-buyer rule change is this federal ban on established dwelling purchases by non-residents, administered by the ATO and FIRB, combined with Victoria's existing 8% foreign purchaser additional duty which makes the total transaction cost very high for overseas buyers.

On the mortgage side, APRA has maintained its 3 percentage point serviceability buffer, meaning lenders must assess borrowers' ability to repay at a rate 3% above the actual loan rate, which keeps credit conditions tight and prevents the kind of overleveraging that could lead to a price bubble.

You can also read our latest update about mortgage and interest rates in Australia.

Will it be easy to find tenants in Melbourne as of 2026?

Is the renter pool growing faster than new supply in Melbourne as of 2026?

As of January 2026, renter demand in Melbourne continues to outpace new rental supply, though the gap has narrowed slightly compared to the extreme tightness of 2022 to 2023, with SQM Research forecasting capital city rental growth of 2% to 4% in 2026 as supply and demand move closer to balance.

The key driver of renter demand in Melbourne remains strong overseas migration, particularly international students and skilled workers, combined with Melbourne's status as Australia's fastest-growing capital city by population.

On the supply side, new dwelling completions in Victoria have been weak, with approvals running below the decade average due to high construction costs and labor shortages, meaning the rental stock is not expanding fast enough to fully absorb demand.

Are days-on-market for rentals falling in Melbourne as of 2026?

As of January 2026, rental days on market in Melbourne remain relatively short for well-located properties, with good rentals in desirable suburbs leasing within 2 to 3 weeks, though this has eased slightly from the extreme tightness of 2022 when properties were snapped up within days.

The difference in leasing speed between Melbourne's best areas and weaker areas is significant, with inner suburbs like Richmond, South Yarra, Carlton, and Brunswick seeing strong tenant demand and fast leasing, while some CBD high-rise apartments and outer suburban areas with lots of similar stock can take longer to fill.

One common reason rental days on market stays low in Melbourne is the structural undersupply of quality rental stock, combined with ongoing population growth that keeps the pool of prospective tenants larger than the available properties in most desirable locations.

Are vacancies dropping in the best areas of Melbourne as of 2026?

As of January 2026, vacancy rates in Melbourne's best-performing rental areas such as inner-city suburbs Richmond, Fitzroy, Carlton, and South Yarra, as well as family-friendly middle-ring suburbs like Balwyn and Glen Waverley, remain tight and below the citywide average of around 2%.

The estimated vacancy rate in these premium Melbourne rental suburbs sits closer to 1% to 1.5%, compared to the overall Melbourne metro vacancy rate of around 2%, reflecting the persistent demand for well-located properties near transport, schools, and employment.

One practical sign for landlords that Melbourne's best areas are tightening first is the emergence of rental queues at open inspections and tenants offering above-asking rent to secure properties, which is more common in inner and lifestyle suburbs than in outer areas with newer apartment stock.

By the way, we've written a blog article detailing what are the current rent levels in Melbourne.

Am I buying into a tightening market in Melbourne as of 2026?

Is for-sale inventory shrinking in Melbourne as of 2026?

As of January 2026, for-sale inventory in Melbourne has declined compared to the same time last year, with total listings down approximately 12.5% year-on-year according to OpenAgent data, even as new listings have increased by around 9%, indicating that properties are being absorbed by buyers faster than new stock is coming to market.

The estimated months of supply in Melbourne sits around 3 to 4 months based on current sales rates and listing volumes, which is at the lower end of what is considered a balanced market (typically 4 to 6 months) and suggests conditions favor sellers more than buyers.

The most likely reason inventory is shrinking in Melbourne is the combination of tight new construction pipelines, homeowners staying put rather than selling due to uncertainty about finding their next property, and increased buyer activity as confidence returns following interest rate cuts in 2025.

Are homes selling faster in Melbourne as of 2026?

As of January 2026, the median time to sell a home in Melbourne sits around 30 to 33 days, which represents a slight improvement from the 36-day median seen earlier in 2025 and suggests buyer activity has picked up.

The year-on-year change in median days on market for Melbourne shows a modest improvement of 1 to 3 days faster compared to the same period in 2024, reflecting increased buyer confidence following rate cuts and improved sentiment about Melbourne's growth prospects.

Are new listings slowing down in Melbourne as of 2026?

As of January 2026, new for-sale listings in Melbourne have actually increased by approximately 9% year-on-year, suggesting more sellers are entering the market to take advantage of improved buyer demand and positive price momentum.

The seasonal pattern for new listings in Melbourne typically sees a surge in spring (September to November) followed by a quieter period over the summer holidays, with activity picking up again in late January and February, which means the current level is not unusually low for this time of year.

Is new construction failing to keep up in Melbourne as of 2026?

As of January 2026, new housing completions in Melbourne are falling short of household demand, with CBRE projecting apartment delivery in Melbourne to average around 9,000 units per year through 2030, which is nearly 25% below Sydney and insufficient to meet the estimated 38,000 annual demand for housing stock across all types.

The recent trend in building approvals for Victoria shows weakness, with approvals running below the decade average due to high construction costs, labor shortages, and challenging project feasibility, which signals continued undersupply in the pipeline.

The single biggest bottleneck limiting new construction in Melbourne is project feasibility, where high construction costs, elevated interest rates on development finance, and labor constraints make it uneconomic to build many projects that would otherwise be approved.

Will it be easy to sell later in Melbourne as of 2026?

Is resale liquidity strong enough in Melbourne as of 2026?

As of January 2026, resale liquidity in Melbourne is reasonably strong for well-priced, well-located properties, with homes in desirable suburbs typically selling within 30 to 35 days when priced correctly and presented well.

The median days on market for resale homes in Melbourne sits around 30 to 33 days, which is within the healthy liquidity benchmark of under 45 days and suggests sellers can expect a relatively efficient transaction if they price appropriately.

The property characteristic that most improves resale liquidity in Melbourne is location near transport and schools, with houses and townhouses in established family suburbs like Balwyn, Camberwell, Glen Waverley, and Bentleigh consistently selling faster than apartments in high-supply areas or homes in outer growth corridors with lots of similar stock.

Is selling time getting longer in Melbourne as of 2026?

As of January 2026, selling time in Melbourne has stabilized and even improved slightly compared to 2024, with the median days on market dropping from around 36 days to 30 to 33 days as buyer activity has increased.

The current median days on market in Melbourne sits around 30 to 33 days, with a realistic range across most listings of 20 to 50 days depending on property type, condition, and pricing accuracy.

One clear reason selling time can lengthen in Melbourne is overpricing relative to comparable sales, because buyers have access to extensive online data and will wait out overpriced listings until the vendor reduces expectations or the property is withdrawn.

Is it realistic to exit with profit in Melbourne as of 2026?

As of January 2026, the likelihood of selling with a profit in Melbourne is medium to high for buyers who hold for at least five to seven years, because the market is positioned for steady growth and major infrastructure improvements are enhancing suburb desirability.

The estimated minimum holding period in Melbourne that most often makes exiting with profit realistic is five to seven years, which allows time to absorb transaction costs and benefit from at least one growth cycle.

The estimated total round-trip cost drag in Melbourne, including stamp duty on purchase, agent commission on sale, legal fees, and other costs, runs approximately 8% to 10% of the property value (around AUD 80,000 to 100,000 on a million-dollar home, or roughly USD 50,000 to 65,000 / EUR 48,000 to 60,000).

One clear factor that most increases profit odds in Melbourne is buying near new infrastructure before it opens, such as properties in Metro Tunnel or Suburban Rail Loop station catchments, because accessibility premiums typically build into prices once the infrastructure is operational and proven.

What sources have we used to write this blog article?

Whether it's in our blog articles or the market analyses included in our property pack about Melbourne, we always rely on the strongest methodology we can and we don't throw out numbers at random.

We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.