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
Melbourne is entering 2026 in a unique position: the city has lagged behind other Australian capitals for years, but most major forecasters now expect it to lead price growth over the next 12 months.
This article covers the current housing prices in Melbourne, the neighborhoods where things are changing fastest, and the specific rules foreign buyers need to understand before purchasing.
We constantly update this blog post as new data and market changes come out.
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.
How's the real estate market going in Melbourne in 2026?
What's the average days-on-market in Melbourne in 2026?
As of early 2026, the median days-on-market for residential properties in Melbourne sits around 34 days, which means most homes are finding buyers in just over a month.
In practice, the typical range in Melbourne spans from about 25 days for well-located houses in strong school zones to 50 or more days for apartments in oversupplied pockets like parts of Docklands or Southbank.
Compared to late 2023 and early 2024, when days-on-market in Melbourne often stretched beyond 40 days and buyer activity was sluggish, the current pace represents a clear improvement and reflects returning confidence in the Melbourne property market.
Are properties selling above or below asking in Melbourne in 2026?
As of early 2026, the typical private-treaty sale in Melbourne closes at about 3% below the initial asking price, while well-run auctions in desirable suburbs can still achieve results at or slightly above the quoted range.
Roughly 60 to 65% of Melbourne properties sell at or below asking price, with the remaining 35 to 40% achieving above-asking results, mostly concentrated in high-demand house markets with strong school catchments or excellent transport links, though we note this ratio can shift quickly with interest rate news.
Suburbs like Hawthorn, Camberwell, Brighton, and parts of the inner north such as Northcote and Fitzroy are where bidding wars and above-asking results remain most common in Melbourne, because these areas combine scarcity of quality stock with deep pools of cashed-up buyers.
By the way, you will find much more detailed data in our property pack covering the real estate market in Melbourne.
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Australia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
What kinds of residential properties can I realistically buy in Melbourne?
What property types dominate in Melbourne right now?
In Melbourne, the property market splits roughly into 55 to 60% detached houses, 30 to 35% apartments and units, and 10 to 15% townhouses and semi-detached homes, though these proportions vary a lot between inner-city and outer suburbs.
Detached houses still represent the largest share of Melbourne's residential market, particularly in the middle and outer rings where family buyers dominate.
This dominance of houses comes from Melbourne's historical suburban sprawl pattern, strong cultural preference for a backyard, and the sheer size of the metropolitan area, which stretches over 160 kilometers from north to south.
If you want to know more, you should read our dedicated analyses:
- How much should you pay for a house in Melbourne?
- How much should you pay for an apartment in Melbourne?
- How much should you pay for a townhouse in Melbourne?
Are new builds widely available in Melbourne right now?
New-build properties make up roughly 15 to 20% of all residential listings in Melbourne, with availability concentrated in specific corridors and renewal areas rather than spread evenly across the city.
As of early 2026, the highest concentrations of new-build developments in Melbourne are found in the CBD and Southbank, Docklands, Fishermans Bend, Box Hill, Clayton, Sunshine, and the outer growth corridors like Cranbourne, Wyndham Vale, and Melton South.
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Which neighborhoods are improving fastest in Melbourne in 2026?
Which areas in Melbourne are gentrifying in 2026?
As of early 2026, the Melbourne suburbs showing the clearest signs of gentrification include Preston, Reservoir, Footscray, Coburg, Brunswick West, Sunshine, and Seddon in the inner west, plus Frankston and Cheltenham further south.
In these areas, the visible changes include specialty coffee roasters replacing old fish and chip shops, heritage homes being renovated with architect-designed extensions, warehouse conversions to creative studios, and a noticeable shift toward younger professionals and families replacing long-term retirees.
Over the past two to three years, these gentrifying Melbourne neighborhoods have seen estimated price appreciation of 8 to 15%, with Reservoir and Preston recording some of the strongest gains as level-crossing removals and station upgrades completed.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Melbourne.
Where are infrastructure projects boosting demand in Melbourne in 2026?
As of early 2026, the Melbourne areas seeing the strongest infrastructure-driven demand boosts include the Metro Tunnel corridor suburbs (Arden, Parkville, North Melbourne), Box Hill and Clayton along the Suburban Rail Loop route, and Sunshine which is becoming a major transport super-hub.
The specific projects driving this demand in Melbourne include the Metro Tunnel (which switches on February 1, 2026), the Suburban Rail Loop East (connecting Cheltenham to Box Hill), the North East Link freeway, and the Melbourne Airport Rail Link via Sunshine.
The Metro Tunnel is already operational in early 2026, while the Suburban Rail Loop East is expected to complete in the early 2030s, and the Airport Rail Link is targeted for completion around 2029 to 2031.
In Melbourne, the typical price impact from major infrastructure announcements ranges from 5 to 10% over the construction period, with a further 10 to 20% boost in the years immediately following completion as accessibility improvements become real and residents feel the daily benefit.
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.
What do locals and insiders say the market feels like in Melbourne?
Do people think homes are overpriced in Melbourne in 2026?
As of early 2026, sentiment among Melbourne locals and market insiders is mixed: many feel stretched by prices relative to incomes, but there's also a growing view that Melbourne looks like value compared to Sydney and even Brisbane or Perth after their recent surges.
Those who argue Melbourne homes are overpriced typically point to the price-to-income ratio (now around 7 times median household income for houses), high stamp duty costs, and the fact that mortgage repayments on a median-priced home consume a large share of average earnings.
On the other side, those who believe Melbourne prices are fair argue that the city offers better value than Sydney (where medians are 30 to 40% higher), that rents are rising sharply which supports property values, and that population growth will keep pressure on housing for years.
Melbourne's price-to-income ratio of approximately 7 is below Sydney's ratio of over 9 and roughly in line with Brisbane, making Melbourne relatively more accessible among Australia's major east coast capitals.
What are common buyer mistakes people regret in Melbourne right now?
The most frequently cited buyer mistake in Melbourne is underestimating total purchase costs, particularly the Victorian stamp duty (which can exceed $50,000 on a million-dollar property) and, for foreign buyers, the additional 8% foreign purchaser duty that many don't factor into their budget until it's too late.
The second most common regret in Melbourne is buying a high-rise apartment in an oversupplied tower without understanding the owners corporation (strata) situation, only to discover large special levies for cladding remediation, defects, or building insurance that erode the investment's value.
If you want to go deeper, you can check our list of risks and pitfalls people face when buying property in Melbourne.
It's because of these mistakes that we have decided to build our pack covering the property buying process in Melbourne.
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How easy is it for foreigners to buy in Melbourne in 2026?
Do foreigners face extra challenges in Melbourne right now?
Foreign buyers face significantly more hurdles than local buyers when purchasing property in Melbourne in 2026, primarily due to federal restrictions on what they can buy and substantial additional state taxes.
The biggest legal restriction is the federal government's temporary ban on foreign purchases of established dwellings, which runs from April 1, 2025 to March 31, 2027, meaning most foreign buyers in Melbourne can only purchase new-build properties or vacant land for development during this period.
Beyond the legal rules, practical challenges foreigners face in Melbourne include navigating the FIRB (Foreign Investment Review Board) approval process, understanding the auction system which dominates sales in many Melbourne suburbs, dealing with time zone differences when bidding, and finding lenders willing to offer mortgages to non-residents.
We will tell you more in our blog article about foreigner property ownership in Melbourne.
Do banks lend to foreigners in Melbourne in 2026?
As of early 2026, mortgage financing is available for foreign buyers in Melbourne, but options are more limited than for residents, with fewer lenders participating and stricter conditions across the board.
Foreign buyers in Melbourne should typically expect loan-to-value ratios of 60 to 70% (meaning a 30 to 40% deposit is required), with interest rates often 0.5 to 1.5% higher than what Australian residents would pay for similar loans.
Banks lending to foreigners in Melbourne typically require verified income documentation translated into English, evidence of stable employment, proof of funds for the deposit, FIRB approval, and often want to see the borrower has some connection to Australia such as a visa or business interests.
You can also read our latest update about mortgage and interest rates in Australia.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
How risky is buying in Melbourne compared to other nearby markets?
Is Melbourne more volatile than nearby places in 2026?
As of early 2026, Melbourne's price volatility sits in the middle of Australian capitals: less extreme than the recent boom-bust cycles seen in Perth and Brisbane, but with more pronounced swings than Sydney's more gradual movements.
Over the past decade, Melbourne experienced a peak-to-trough decline of about 10 to 12% during the 2017 to 2019 downturn, while Perth fell over 20% during its mining correction and Brisbane remained relatively flat before its recent surge of 70%+ since 2020.
If you want to go into more details, we also have a blog article detailing the updated housing prices in Melbourne.
Is Melbourne resilient during downturns historically?
Melbourne has historically shown solid resilience during economic downturns, with property values typically declining less than other discretionary assets and recovering within two to four years after each correction.
During the most recent significant downturn (2017 to 2019, driven by credit tightening), Melbourne house prices fell approximately 10 to 12% from peak, then took about 18 to 24 months to recover those losses once lending conditions eased.
In Melbourne, the property types and neighborhoods that have historically held value best during downturns are established houses in inner-east suburbs like Hawthorn, Camberwell, and Kew, as well as well-located family homes in good school catchments such as Glen Waverley, Balwyn, and Brighton.
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How strong is rental demand behind the scenes in Melbourne in 2026?
Is long-term rental demand growing in Melbourne in 2026?
As of early 2026, long-term rental demand in Melbourne is growing strongly, with vacancy rates sitting around 1.5 to 2.0% across Greater Melbourne, well below the 2.5 to 3.0% level considered balanced.
The tenant groups driving long-term rental demand in Melbourne are international students returning in large numbers, young professionals priced out of buying, and new migrants arriving under Australia's skilled visa programs.
The Melbourne neighborhoods with the strongest long-term rental demand right now include inner-city areas near universities (Carlton, Parkville, Clayton), professional hubs (South Yarra, Richmond, St Kilda), and family-friendly middle-ring suburbs with good schools (Glen Waverley, Box Hill, Bentleigh).
You might want to check our latest analysis about rental yields in Melbourne.
Is short-term rental demand growing in Melbourne in 2026?
Victoria has introduced regulations requiring short-term rental operators in Melbourne to register their properties and pay a levy, which has professionalized the market but also increased compliance costs for hosts.
As of early 2026, short-term rental demand in Melbourne is stable to moderately growing, supported by the return of international tourism and major events like the Australian Open, Formula 1 Grand Prix, and sporting fixtures.
The current average occupancy rate for short-term rentals in Melbourne sits around 55%, which is healthy but requires active management and competitive pricing to achieve strong returns.
The guest demographics driving Melbourne's short-term rental demand include domestic leisure travelers, international tourists (particularly from Asia and Europe), business travelers attending conferences and events, and families visiting for university graduations or relocations.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in Melbourne.
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 are the realistic short-term and long-term projections for Melbourne in 2026?
What's the 12-month outlook for demand in Melbourne in 2026?
As of early 2026, the 12-month demand outlook for Melbourne residential property is positive, with most major forecasters expecting steady buyer activity supported by population growth, returning investor confidence, and potential interest rate stability or modest cuts.
The key factors most likely to influence Melbourne property demand over the next 12 months are Reserve Bank of Australia interest rate decisions, federal and state government housing policies, migration intake levels, and whether Victoria's land tax changes prompt more or fewer investors to sell.
Price forecasts for Melbourne over the next 12 months range from 4% to 7% growth, with KPMG projecting 6.6% for houses and 7.1% for units, Domain forecasting around 6%, and the major banks (Westpac, NAB) estimating 3.5 to 4% growth.
By the way, we also have an update regarding price forecasts in Australia.
What's the 3 to 5 year outlook for housing in Melbourne in 2026?
As of early 2026, the 3 to 5 year outlook for Melbourne housing is generally positive, with structural undersupply, continued population growth, and major infrastructure completions expected to support prices and demand through the late 2020s.
The major development projects expected to shape Melbourne over the next 3 to 5 years include the Suburban Rail Loop (connecting middle suburbs), continued densification in activity centers like Box Hill and Footscray, the Melbourne Airport Rail Link, and urban renewal in Fishermans Bend and Arden.
The single biggest uncertainty that could alter Melbourne's 3 to 5 year outlook is interest rates: if inflation proves sticky and rates stay higher for longer than expected, affordability constraints could limit price growth and transaction volumes significantly.
Are demographics or other trends pushing prices up in Melbourne in 2026?
As of early 2026, demographic trends are a major driver of Melbourne housing prices, with Victoria adding around 150,000 people in the most recent year, most of whom settle in Greater Melbourne and need somewhere to live.
The specific demographic shifts affecting Melbourne prices include strong overseas migration (particularly skilled workers and international students), positive net interstate migration returning after pandemic outflows, and household formation among millennials now entering their prime home-buying years.
Beyond demographics, Melbourne prices are also being pushed by limited new housing supply relative to demand, rising construction costs making new builds more expensive, and investor activity returning as Melbourne's relative value compared to Sydney becomes more apparent.
These demographic and trend-driven pressures on Melbourne housing are expected to continue for at least the next 5 to 10 years, given Australia's immigration settings and the structural undersupply of housing that will take many years to address even with increased building approvals.
What scenario would cause a downturn in Melbourne in 2026?
As of early 2026, the most likely scenario that could trigger a housing downturn in Melbourne would be an unexpected return to interest rate increases, combined with a sharp slowdown in migration or a significant rise in unemployment that reduces buyer capacity.
Early warning signs that a Melbourne downturn might be beginning would include auction clearance rates falling consistently below 55%, days-on-market stretching beyond 50 days, vendor discounting widening to 5% or more, and a sustained increase in distressed listings particularly in outer suburbs.
Based on Melbourne's historical patterns, a potential downturn could realistically see prices decline 8 to 15% from peak to trough over 12 to 24 months, with recovery typically taking another 18 to 36 months once conditions stabilize, though Melbourne has never experienced a crash on the scale seen in some international markets.
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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) - Residential Property Price Indexes | ABS is Australia's official statistics agency and this dataset is the benchmark for housing price tracking across all capital cities. | We used it to compare Melbourne's price cycle against other Australian capitals. We cross-checked ABS figures with private indices to ensure our analysis wasn't relying on just one methodology. |
| ABS - Building Approvals | This is the official government dataset tracking the pipeline of future housing supply across Australia. | We used it to assess whether new housing supply is increasing or tightening in Melbourne. We treated it as our supply-side reality check against listings data and rental market pressure. |
| ABS - Regional Population | This is the official population and migration dataset that underpins housing demand projections for all Australian regions. | We used it to quantify demand pressure from population growth in Greater Melbourne. We paired it with vacancy rates and rental indicators to see if that demand is showing up in actual market tightness. |
| Cotality (CoreLogic) - Housing Market Research | Cotality/CoreLogic is Australia's largest property data provider with transparent methodology and comprehensive coverage of all markets. | We used it for forward-looking analysis of Melbourne's 2026 momentum and affordability constraints. We triangulated their outlook with other forecasters and official indicators to build a balanced view. |
| Australian Taxation Office - Foreign Purchase Ban | The ATO administers the current foreign investment rules and this page states the official policy settings and dates. | We used it to establish the 2025-2027 ban period for foreign buyers of established dwellings. We then mapped what this means practically for foreigners looking at Melbourne properties. |
| State Revenue Office Victoria - Foreign Purchaser Duty | SRO is Victoria's tax authority and this is the definitive source for foreign buyer duty rates in the state. | We used it to quantify the extra 8% upfront tax cost that foreign purchasers face in Melbourne. We cross-checked with the current rates page to ensure accuracy. |
| Victoria's Big Build - Metro Tunnel | This is the official Victorian Government page for one of Melbourne's most significant transport infrastructure projects. | We used it to identify which suburbs will see improved accessibility from early 2026. We used the confirmed February 1, 2026 start date to explain why certain neighborhoods may see demand increases. |
| SQM Research - Vacancy Rates | SQM is a long-running, widely cited rental market tracker with consistent methodology across Australian cities. | We used it to gauge rental market tightness in Melbourne as a proxy for underlying demand. We used their methodology notes to explain what the vacancy rate actually measures. |
| AirDNA - Short-Term Rental Data | AirDNA is a recognized short-stay data provider with consistent metrics for occupancy, daily rates, and revenue across markets. | We used it to estimate short-term rental performance in Melbourne for early 2026. We combined it with tourism data to avoid mistaking listing growth for actual demand. |
| Domain - House Price Report | Domain is one of Australia's major property platforms with regular research publications and large transaction datasets. | We used it as a second private-sector cross-check on Melbourne price trends and market sentiment. We used it to confirm that broader market direction aligns with other indices. |
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