Authored by the expert who managed and guided the team behind the Australia Property Pack
Buying a property in Melbourne is a significant decision, and the last thing you want is to overpay or buy at the wrong time.
Yes, the analysis of Melbourne's property market is included in our pack
In this article, we break down what Melbourne's property market really looks like in early 2026, using official data and verified sources.
We look at prices, rental conditions, new construction, infrastructure changes, and the regulatory environment, so you can make an informed decision rather than relying on gut feeling.
We constantly update this blog post with the latest data and developments, so bookmark it and come back anytime.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Melbourne.
So, is now a good time?
As of February 2026, the answer is rather yes for buying property in Melbourne, especially if you're in it for the long term and can comfortably handle current mortgage rates.
The strongest signal is that Melbourne dwelling values are still about 0.7% below their previous peak, meaning you're not buying at an all-time high while the market is already trending upward again, with prices up around 5% over the past year.
Another strong signal is the rental market: Melbourne's vacancy rate sits at roughly 2%, which keeps rental income reliable and reduces the risk of your investment property sitting empty.
Other signals include major infrastructure projects (the Metro Tunnel is now open and the Suburban Rail Loop is under construction), weak building approvals limiting future supply, and the APRA 3% serviceability buffer preventing the kind of reckless lending that usually precedes a crash.
The best strategy in Melbourne in 2026 is to focus on well-located houses or townhouses near transport and schools for long-term capital growth, or on boutique apartments in inner suburbs (like Richmond, South Yarra, or Carlton) if you want strong rental demand, and to plan for a holding period of at least five to seven years.
This is not financial or investment advice, we don't know your personal situation, your borrowing capacity, or your goals, so please do your own research and consult a qualified professional before making any decision.
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 early 2026, Melbourne property prices are near but still slightly below their all-time high, with dwelling values about 0.7% off the previous peak, which tells you prices are elevated but not in obvious bubble territory.
One clear signal from the ground is that the median time on market for Melbourne properties sits around 30 to 32 days, which is a touch slower than the national average of 27 days, meaning buyers still have a bit of room to negotiate rather than being forced into panicked bidding wars.
Another telling sign is that total listings in Melbourne fell roughly 12.5% year-on-year by late 2025, which suggests that while prices feel high, sellers aren't flooding the market because they know conditions aren't frothy enough to cash out at a premium.
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 early 2026, the likelihood of a meaningful price drop in Melbourne over the next 12 months is low, mainly because lending rules are tight, forced selling is minimal, and there's no sign of a jobs crisis on the horizon.
The plausible range for Melbourne property prices over the next year sits somewhere between -3% on the downside and +7% on the upside, with most forecasters (including Domain, KPMG, and the major banks) leaning toward moderate growth of 4% to 6%.
The single macro factor that could most increase the odds of a Melbourne price drop is a surprise rise in interest rates, because borrowing capacity is already stretched at the current RBA cash rate of 3.60%, and even a small increase would reduce what buyers can afford.
That said, further rate hikes look unlikely, as the RBA has been on hold since late 2025 and most major bank economists expect the next move to be a cut (possibly mid-2026), not a hike.
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 early 2026, the likelihood of a renewed price surge in Melbourne is medium: the ingredients are forming (population growth, constrained supply, potential rate cuts), but affordability limits mean any jump would probably be measured rather than explosive.
On the upside, Melbourne prices could plausibly rise between 5% and 8% over the next 12 months if rate cuts materialise and buyer confidence keeps building, with KPMG forecasting around 6.6% growth for houses and 7.1% for units.
The single biggest demand-side trigger that could drive a Melbourne price jump is a series of RBA rate cuts in 2026, because even a 0.25% to 0.50% reduction in the cash rate meaningfully boosts borrowing capacity and tends to pull sidelined buyers back into the market quickly.
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 early 2026, Melbourne sits in a roughly balanced market with a slight lean toward sellers in the most desirable pockets, because prices are rising modestly and total listings are lower than a year ago, but buyers still have enough choice to avoid panic decisions.
While Melbourne doesn't publish a standard "months-of-inventory" figure like the US market does, the combination of around 30 to 32 days median time on market and a roughly 12% drop in total listings points to a market where supply is tight enough that well-priced homes sell in a reasonable timeframe, but not so tight that sellers can name any price.
That said, price discounting does still happen in Melbourne in 2026, particularly for overpriced apartments in high-supply areas like parts of the CBD, Docklands, and Southbank, where vendor expectations often have to come down before a deal gets done, which tells you seller leverage is patchy rather than universal across the city.
We have made this infographic to give you a quick and clear snapshot of the property market in Australia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
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 early 2026, Melbourne homes look moderately overpriced when measured against both rents and incomes, meaning you're paying a premium for capital growth expectations rather than getting a bargain supported by current cash returns.
Melbourne's gross rental yield sits at roughly 3.4% to 3.6% for dwellings in early 2026, which is below the 4% to 5% range that typically signals a balanced price-to-rent relationship, so in simple terms, it takes about 28 to 30 years of rent to "pay back" the purchase price before costs.
On the income side, Melbourne's median house price of around $1.10 million represents roughly 7 to 9 times a typical household income, well above the 4 to 5 times ratio that's generally considered affordable, though units at around $600,000 to $620,000 come in at a more manageable 4 to 5 times income.
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 early 2026, Melbourne property prices are above their long-term average in dollar terms, but only just returning to where they were at the previous cycle peak, which means they're elevated by historical standards yet not dramatically stretched relative to recent highs.
Over the 12 months to January 2026, Melbourne dwelling values rose roughly 5.4%, which is close to the city's long-run average annual growth rate of about 6% to 7%, so the recent pace feels "normal" rather than overheated compared to pre-pandemic trends.
When you adjust for inflation, Melbourne prices are still slightly below their prior real peak because consumer prices have risen faster than dwelling values over the past couple of years, which means in purchasing-power terms, the city is actually a touch cheaper now than it was at the absolute top of the last cycle.
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What local changes could move prices in Melbourne as of 2026?
Are big infrastructure projects coming to Melbourne as of 2026?
As of early 2026, the biggest infrastructure project already affecting Melbourne property values is the Metro Tunnel, which is now open and completed its full timetable integration on 1 February 2026, directly improving train access to the CBD and inner suburbs and likely adding a proximity premium to properties near its five new stations (Arden, Parkville, State Library, Town Hall, Anzac).
The Metro Tunnel is fully delivered and operational as of February 2026, while the next major project, the Suburban Rail Loop (SRL) East connecting Cheltenham to Box Hill, is actively under construction at all six station sites with completion expected around the early 2030s, meaning suburbs like Clayton, Glen Waverley, and Box Hill are already seeing "anticipation value" even though the line won't open for 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 change being implemented in Melbourne is the Housing Statement Reform Act 2025, which aims to speed up planning approvals and increase housing density in established suburbs, particularly for medium-density projects like townhouses and low-rise apartments.
As of early 2026, the net effect of these zoning changes on Melbourne prices is likely to be mildly downward over the medium term (three to five years) as more supply gets approved, but the impact will be gradual because Melbourne's real bottleneck is construction feasibility (labour costs, material costs, and developer financing) rather than just planning paperwork.
The areas most affected by these rule changes in Melbourne are middle-ring suburbs near train stations and activity centres, places like Preston, Heidelberg, Glenroy, Oakleigh, and Moorabbin, where rezoning for higher density is most likely to unlock new townhouse and apartment projects.
Are foreign-buyer or mortgage rules changing in Melbourne as of 2026?
As of early 2026, the direction of both foreign-buyer and mortgage rules in Melbourne is restrictive, which means these policy settings are limiting demand at the margin and making a debt-fuelled price spike less likely.
On the foreign-buyer side, the most significant rule in effect is a temporary ban on foreign purchases of established dwellings in Australia, running from 1 April 2025 to 31 March 2027, combined with Victoria's own 8% foreign purchaser additional duty, which together make it very expensive and often outright impossible for overseas buyers to compete for existing Melbourne homes.
On the mortgage side, APRA's 3% serviceability buffer remains firmly in place in 2026, which means banks must test whether borrowers can still afford repayments if their interest rate rose by three percentage points above the actual rate, effectively capping how much Australians can borrow and preventing the kind of stretched lending that would push Melbourne prices into dangerous territory.
You can also read our latest update about mortgage and interest rates in Australia.
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An increasing number of foreign investors are showing interest. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
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 early 2026, renter demand in Melbourne is growing faster than new rental supply, largely because the city is adding roughly 75,000 to 140,000 people per year through migration while building approvals remain well below what's needed to house them all.
Melbourne's net overseas migration has been the largest of any Australian city in recent years (over 121,000 people in 2023-24 alone), and most new arrivals initially rent, which makes the city's renter pool one of the fastest-growing in the country.
On the supply side, ABS building approvals data has been soft nationally and in Victoria throughout 2025, and the gap between what gets approved and what actually gets built is widening because of construction cost pressures, labour shortages, and developer financing challenges, meaning new rental stock is arriving much slower than demand.
Are days-on-market for rentals falling in Melbourne as of 2026?
As of early 2026, Melbourne rental properties are leasing at a steady pace, with the citywide vacancy rate holding around 2.0%, which suggests that most well-priced rentals find tenants within two to three weeks, although this varies a lot by location and property type.
In the best inner suburbs like Richmond, South Yarra, Carlton, Fitzroy, and Brunswick, quality rentals can lease in under two weeks, while in investor-heavy apartment clusters around the CBD and Docklands, similar properties can sit for four to six weeks because tenants have more near-identical options to choose from.
The main reason rental days-on-market stays low across Melbourne in 2026 is the simple mismatch between strong demand from overseas arrivals and students and the limited flow of new rental stock, which keeps competition for good properties intense even as rent growth moderates.
Are vacancies dropping in the best areas of Melbourne as of 2026?
As of early 2026, vacancies in Melbourne's best-performing rental areas like Richmond, South Yarra, Carlton, Fitzroy, and the inner southeast (around Prahran, Windsor, and St Kilda) remain tight and are holding below the citywide average, with these pockets typically running closer to 1.5% vacancy or less.
While Melbourne's overall vacancy rate is around 2.0%, the inner lifestyle suburbs and the Parkville health and university precinct consistently sit tighter because tenant demand is "sticky": people want to live near their jobs, their campus, or their favourite neighbourhood, and they'll pay a premium rather than move further out.
One practical sign that the best areas are tightening first in Melbourne is that rental listings in these inner suburbs are increasingly attracting multiple applications within the first week, pushing successful tenants to offer above the asking rent or agree to longer lease terms, something that rarely happens in the outer growth corridors.
By the way, we've written a blog article detailing what are the current rent levels in Melbourne.
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Am I buying into a tightening market in Melbourne as of 2026?
Is for-sale inventory shrinking in Melbourne as of 2026?
As of early 2026, for-sale inventory in Melbourne appears to be tightening compared to a year ago, with total advertised listings down roughly 12% to 15% year-on-year by late 2025, although we should be honest that precise real-time stock figures fluctuate with seasonal listing patterns.
Nationally, total advertised stock was about 15.8% lower than a year ago and 20.6% below the five-year average as of December 2025 (per Cotality), and while Melbourne has slightly more available stock than some other capitals, the trend is clearly toward less choice for buyers rather than more.
The most likely reason inventory is shrinking in Melbourne is that homeowners who locked in low fixed rates during 2020 to 2022 are reluctant to sell and take on a new mortgage at today's higher rates, which keeps a lot of potential listings off the market and tightens supply for active buyers.
Are homes selling faster in Melbourne as of 2026?
As of early 2026, the median time to sell a home in Melbourne is around 30 to 32 days, which represents a slight improvement from the 31 to 33 day range a year earlier, suggesting that well-priced Melbourne properties are selling a bit faster but not dramatically so.
Year-on-year, the change in median days-on-market for Melbourne is a modest improvement of about one to two days, which is not a huge shift but tells you that demand is firming rather than weakening, and that the market is slowly tightening in the seller's favour without turning into a frenzy.
Are new listings slowing down in Melbourne as of 2026?
As of early 2026, new for-sale listings in Melbourne actually rose by about 9% year-on-year into late 2025, so we can't say new listings are slowing down, though this increase was more than offset by strong buyer absorption, which is why total stock still fell.
Melbourne typically sees a big seasonal surge in new listings during the spring auction season (September to November) and a quieter period over summer and into autumn, and the current listing flow looks broadly in line with that historical pattern rather than unusually low or unusually high.
Is new construction failing to keep up in Melbourne as of 2026?
As of early 2026, new construction in Melbourne is clearly not keeping up with household demand: the city is adding over 75,000 residents a year but building approvals and completions remain well below what's needed to house that growth, creating a structural supply gap that supports prices and rents.
ABS building approvals data shows that Victoria's approval pipeline has been soft through most of 2025, with national dwelling approvals trending below historical averages, and the gap between approvals and actual completions remains wide because many approved projects never get built or face significant delays.
The single biggest bottleneck limiting new construction in Melbourne is feasibility: construction costs have risen sharply (materials, labour, and financing), which means many projects that are approved on paper don't stack up financially for developers to actually build, and this cost squeeze is unlikely to ease quickly.
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Will it be easy to sell later in Melbourne as of 2026?
Is resale liquidity strong enough in Melbourne as of 2026?
As of early 2026, resale liquidity in Melbourne is solid for well-located, well-priced properties, meaning if you buy something that Melbourne buyers consistently want (good suburb, good transport, good condition), you can expect to sell it within a reasonable timeframe when the time comes.
Melbourne's median days-on-market of around 30 to 32 days is within a healthy range for a major Australian city, and while it's a little slower than booming markets like Perth (around 9 days), it's fast enough to confirm that Melbourne homes don't languish unsold as long as they're priced realistically.
The single characteristic that most improves resale liquidity in Melbourne is proximity to public transport, specifically being within walking distance of a train station, because Melbourne is a commuter-dependent city and the "transport premium" holds up across cycles, making properties near stations consistently easier to sell than otherwise similar homes further from transit.
Is selling time getting longer in Melbourne as of 2026?
As of early 2026, selling times in Melbourne are roughly stable compared to last year, with the median sitting at around 30 to 32 days, which means they haven't shortened dramatically but they also haven't blown out, suggesting a market in a steady holding pattern rather than deteriorating.
In practice, the range is wide: a well-presented family home in a sought-after school zone like Balwyn, Glen Waverley, or Bentleigh can sell in two to three weeks, while a tired apartment in an oversupplied pocket might sit for 60 to 90 days or more before finding a buyer.
The clearest reason selling time could lengthen specifically in Melbourne in 2026 is if affordability pressure worsens without offsetting rate cuts, because buyers who are already stretched on borrowing capacity become pickier and take longer to commit, especially at the $1 million-plus price point where stamp duty alone adds $45,000 to $55,000 to the transaction.
Is it realistic to exit with profit in Melbourne as of 2026?
As of early 2026, the likelihood of exiting with a profit in Melbourne is medium to high if you hold for at least five to seven years, because the city's long-run average annual growth of about 6% to 7% has historically been enough to outpace transaction costs and inflation over that timeframe.
The minimum holding period that most often makes exiting with profit realistic in Melbourne is around five years, because anything shorter risks being caught by a flat or down phase of the cycle, and the round-trip transaction costs are significant enough that you need several years of growth just to break even.
Speaking of transaction costs, the total round-trip cost drag for buying and then selling a Melbourne property (including stamp duty, legal fees, agent commission, and marketing) typically runs to about 7% to 10% of the property value, which on a $1 million home means roughly $70,000 to $100,000 AUD (about $45,000 to $65,000 USD or $42,000 to $60,000 EUR), so these costs are not trivial and must be factored into any profit calculation.
The single factor that most increases your profit odds in Melbourne specifically is buying in a suburb that is about to gain better transport access, because Melbourne's history shows that properties near newly opened train stations or upgraded lines consistently outperform the citywide average, and with the Metro Tunnel just opened and SRL East under construction, there are real opportunities to get ahead of that curve in 2026.
We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
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.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| Australian Bureau of Statistics (ABS) - Property Price Indexes | Australia's official statistics agency and national reference for housing data. | We used it to anchor Melbourne price trends in a consistent, method-driven index. We cross-checked private indexes against ABS to avoid relying on a single source. |
| ABS - Building Approvals | The official pipeline read on future housing supply in Australia. | We used it to judge whether new supply is accelerating or stalling in Melbourne. We paired it with rental data to assess if demand is outrunning construction. |
| Reserve Bank of Australia (RBA) | The RBA sets the policy rate that directly influences mortgage pricing. | We used it to establish the cost-of-money backdrop for Melbourne buyers in 2026. We connected rate settings to borrowing power and downside risk. |
| Australian Prudential Regulation Authority (APRA) | Australia's banking regulator whose buffer rules shape borrowing capacity. | We used it to assess whether credit is likely to surge or stay constrained. We treated the 3% buffer as a guardrail against reckless lending. |
| Cotality (formerly CoreLogic) - Monthly Housing Chart Pack | Australia's most widely cited housing index, used by banks and media. | We used it for near-real-time momentum data (monthly, quarterly, annual changes) and to gauge where Melbourne sits relative to its prior peak. |
| Domain - House Price Report | A major Australian property marketplace with transparent methodology. | We used it for clear median prices (houses vs units) and recent cycle context. We then carried the trend forward using Cotality's subsequent data. |
| Real Estate Institute of Victoria (REIV) | Victoria's peak real estate body with frequent price movement tracking. | We used it as a Victoria-specific cross-check on whether the trend was strengthening or cooling into late 2025. |
| SQM Research - Melbourne Vacancy Rates | A long-running, widely referenced Australian rental data provider. | We used it to quantify Melbourne rental tightness and vacancy trends. We confirmed the direction of conditions using SQM's interactive time series. |
| Transport Victoria - Metro Tunnel | The official state source for Melbourne's biggest transport upgrade. | We used it to identify a Melbourne-specific demand tailwind. We used confirmed commissioning dates to avoid speculative claims. |
| Victoria's Big Build - Suburban Rail Loop | The state's official portal for construction status and progress updates. | We used it to verify where multi-year construction is actively underway. We connected this to suburb-level desirability around future SRL stations. |
| Australian Taxation Office (ATO) - Foreign Buyer Ban | The official source describing the legislated foreign buyer policy. | We used it to evaluate a concrete demand limiter in 2026. We used the date window to explain why this is a real policy constraint, not a headline. |
| State Revenue Office Victoria (SRO) | The source-of-truth for Victorian property taxes and stamp duty. | We used it to quantify the transaction cost penalty for foreign buyers. We also used it for stamp duty estimates in our round-trip cost calculations. |
| OpenAgent - Melbourne Property Market Data | An Australian agent-comparison platform with regularly updated market data. | We used it for days-on-market figures, listing volume changes, and bank forecast comparisons specific to Melbourne. |
| NAB - Melbourne Property Market Insights | One of Australia's Big Four banks with deep property market analysis. | We used it for its 2025 year-in-review data covering median values, days on market, and rental trends in Melbourne. |
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