How's the real estate market doing in Melbourne? (2026)

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

Get all the data you need about the real estate market in Melbourne

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Melbourne. If you’d like to learn more about us, you can check our presentation page.

How’s the real estate market going in Melbourne in 2026?

What's the average days-on-market in Melbourne in 2026?

As of 2026, the average days-on-market for residential property in Melbourne is likely around 40 days, because buyers are cautious and vendors often need more time to accept lower offers.

Most typical Melbourne listings now seem to sell in about 35 to 55 days, while strong family homes can move faster and weak investor apartments can take much longer.

This is slower than the hot parts of 2024 and early 2025, when cheaper credit expectations and stronger confidence helped good Melbourne properties sell with less negotiation.

Are properties selling above or below asking in Melbourne in 2026?

As of 2026, the typical sale-to-asking price ratio in Melbourne is likely around 96% to 98%, which means many homes are selling slightly below the first advertised price.

A reasonable estimate is that only about 20% to 30% of Melbourne homes sell above asking, while most sell at or below asking, and confidence in this estimate is medium because asking prices are not always transparent.

The Melbourne homes most likely to create bidding wars are renovated houses near schools and transport in Northcote, Brunswick, Camberwell, Richmond, Glen Waverley, Carnegie and Moonee Ponds.

By the way, you will find much more detailed data in our property pack covering the real estate market in Melbourne.

What kinds of residential properties can I realistically buy in Melbourne?

What property types dominate in Melbourne right now?

Melbourne residential listings are a mix of detached houses, apartments and townhouses, but foreign buyers in 2026 mostly see new apartments, new townhouses and house-and-land packages as the realistic options.

Detached houses still represent the biggest share of Melbourne’s overall housing stock, especially across the middle and outer suburbs, even though apartments dominate the inner city.

Detached houses became so common in Melbourne because the city expanded outward for decades along rail lines, roads and growth corridors such as Werribee, Tarneit, Craigieburn, Mickleham, Clyde North and Officer.

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 likely represent about 15% to 25% of visible residential listings in Melbourne in 2026, but that share is much higher in apartment-heavy and outer-growth areas.

As of 2026, the highest concentrations of new builds in Melbourne are in the CBD, Southbank, Docklands, Fishermans Bend, Footscray, Box Hill, Clayton, Tarneit, Werribee, Craigieburn, Mickleham, Clyde North and Officer.

Which neighborhoods are improving fastest in Melbourne in 2026?

Which areas in Melbourne are gentrifying in 2026?

As of 2026, the clearest gentrification areas in Melbourne are Footscray, Sunshine, Coburg, Preston, Brunswick, Arden, North Melbourne, Fishermans Bend, Carnegie, Clayton and Box Hill.

In these Melbourne suburbs, the visible signs are renovated workers’ cottages, new apartment projects, better cafés, more professional renters, new health and education jobs, and stronger demand around stations.

Over the past two to three years, the stronger gentrifying pockets of Melbourne have likely seen prices move from flat to about 10% higher, with the best results in scarce houses rather than generic apartments.

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 2026, infrastructure is boosting housing demand most clearly in Arden, North Melbourne, Parkville, State Library, Town Hall, Anzac, Cheltenham, Clayton, Monash, Glen Waverley, Burwood, Box Hill, Fishermans Bend and Port Melbourne.

The main demand drivers are the Metro Tunnel, Suburban Rail Loop East, Fishermans Bend renewal, university and hospital clusters, and new activity-centre planning around future rail stations.

The Metro Tunnel is expected to be the closest major uplift, while Suburban Rail Loop East and Fishermans Bend are longer-term projects that should shape Melbourne demand into the 2030s and 2040s.

In Melbourne, prices often rise when a project becomes credible, but the biggest clean impact usually appears near completion, when buyers can actually feel the shorter commute and better access.

What do locals and insiders say the market feels like in Melbourne?

Do people think homes are overpriced in Melbourne in 2026?

As of 2026, many Melbourne locals still feel houses are overpriced, but many investors also see Melbourne as better value than Sydney, Brisbane, Perth and Adelaide after recent underperformance.

Locals who call Melbourne homes overpriced usually point to high mortgage rates, weak wage growth, vendor discounting, and the fact that the median Melbourne house still costs far more than most local households can comfortably borrow.

The counterargument is that Melbourne has deep jobs, universities, hospitals, migration and transport investment, so good homes in well-connected suburbs can still look fair over a long holding period.

Melbourne’s price-to-income pressure remains high by normal household standards, but Melbourne now looks less stretched than Sydney and less overheated than some faster-rising Australian capitals.

What are common buyer mistakes people regret in Melbourne right now?

The most common regret in Melbourne is buying the wrong apartment building in the CBD, Docklands, Southbank or Box Hill without checking owners-corporation fees, defects, cladding, lifts and resale competition.

The second most common regret is overpaying for outer-growth land in places like Tarneit, Werribee, Craigieburn, Mickleham or Clyde North without comparing nearby supply and commute quality.

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.

How easy is it for foreigners to buy in Melbourne in 2026?

Do foreigners face extra challenges in Melbourne right now?

Foreigners face a high level of difficulty when buying residential property in Melbourne in 2026 because the legal menu is narrower and the buying costs are higher than for local buyers.

Foreign buyers generally need approval, cannot usually buy established dwellings until 30 June 2029, and must usually focus on new dwellings, vacant land with a build plan, or limited exceptions.

The practical challenge in Melbourne is that the easiest foreign-buyer stock is often in high-supply apartment areas, so foreigners must be extra careful with building quality, settlement valuation, body-corporate fees and resale depth.

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 2026, banks do lend to some foreign buyers in Melbourne, but approval is selective and much easier for buyers with strong income, clean documents and a large deposit.

A realistic Melbourne foreign-buyer mortgage range is about 60% to 70% loan-to-value, with interest rates usually above local headline rates once risk, currency and documentation are considered.

Banks usually ask foreign applicants for passport and visa details, foreign income proof, tax records, bank statements, deposit evidence, property contract details and sometimes certified translations.

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

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.

How risky is buying in Melbourne compared to other nearby markets?

Is Melbourne more volatile than nearby places in 2026?

As of 2026, Melbourne looks more volatile than Geelong and Ballarat, less expensive than Sydney, and weaker in short-term momentum than Brisbane, Perth and Adelaide.

Over the past decade, Melbourne has had bigger interest-rate and policy-driven swings than many regional Victorian markets, while Sydney has stayed more expensive and Perth has been more cyclical.

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 been historically resilient over long periods, but downturns can last longer in Melbourne when interest rates rise, investors leave, or apartment supply becomes too heavy.

In the most recent major weakness, Melbourne values fell from late-2025 highs into mid-2026 by a few percent overall, with some prestige houses and weak apartments hit harder than the city average.

The Melbourne properties that usually hold value best are scarce houses and quality townhouses near schools, rail and jobs in Northcote, Camberwell, Hawthorn, Kew, Brunswick, Richmond, Carnegie and Moonee Ponds.

How strong is rental demand behind the scenes in Melbourne in 2026?

Is long-term rental demand growing in Melbourne in 2026?

As of 2026, long-term rental demand in Melbourne is still growing, even while purchase demand is soft, because vacancy remains tight and many would-be buyers are staying renters for longer.

The main tenant groups driving Melbourne rental demand are students, young professionals, healthcare workers, university staff, new migrants, families priced out of buying and expats on work assignments.

The strongest long-term rental demand in Melbourne is around Carlton, Parkville, North Melbourne, Brunswick, Footscray, South Yarra, Richmond, Caulfield, Clayton, Box Hill and Glen Waverley.

You might want to check our latest analysis about rental yields in Melbourne.

Is short-term rental demand growing in Melbourne in 2026?

Short-term rentals in Melbourne are affected by Victoria’s short-stay levy, which applies to short stays under 28 days and makes Airbnb-style returns less clean than before.

As of 2026, short-term rental demand in Melbourne is still growing slowly because events, sport, business travel, universities and tourism keep bringing visitors into the city.

A practical occupancy estimate for stronger Melbourne short-term rentals is about 60% to 75%, with higher results near the CBD, Southbank, Docklands, Richmond, Carlton and major event venues.

The main guest groups in Melbourne are interstate tourists, sports fans, business travelers, visiting families, international students’ relatives and short-stay professionals working near hospitals or universities.

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 2026, the 12-month demand outlook for Melbourne residential property is cautious for buyers, strong for renters, and very dependent on whether interest rates rise again.

The main factors that will shape Melbourne demand are the RBA cash rate, inflation, unemployment, migration, listings, investor taxes, foreign-buyer rules and the amount of new apartment supply.

A realistic forecast is that Melbourne dwelling prices could move between 3% down and 2% up over the next 12 months, with units likely to be more defensive than houses.

By the way, we also have an update regarding price forecasts in Australia.

What's the 3-5 year outlook for housing in Melbourne in 2026?

As of 2026, the 3-5 year outlook for Melbourne housing is better than the 12-month outlook because population growth, transport investment and relative affordability should support demand.

The major projects shaping Melbourne over the next 3-5 years are the Metro Tunnel, Suburban Rail Loop East works, Fishermans Bend renewal, Arden renewal and activity-centre planning around major stations.

The biggest uncertainty for Melbourne is whether high interest rates and state property taxes keep investors away long enough to delay a broader recovery.

Are demographics or other trends pushing prices up in Melbourne in 2026?

As of 2026, demographics are still pushing underlying housing need in Melbourne upward, even though high borrowing costs are stopping some of that need from turning into purchases.

The most important Melbourne demographic shifts are overseas migration, returning student demand, smaller households, growth around outer corridors, and steady demand near universities and hospitals.

The non-demographic trends also supporting Melbourne prices are hybrid work in lifestyle suburbs, investor interest in higher-yield units, and renewed demand for rail-connected middle suburbs.

These pressures should continue for several years, but the speed of price growth in Melbourne will depend on interest rates, construction costs and how much new supply reaches the market.

What scenario would cause a downturn in Melbourne in 2026?

As of 2026, the most likely downturn scenario for Melbourne would be another rate hike, rising unemployment, more investor selling and a spring increase in listings at the same time.

The early warning signs would be auction clearance staying below normal, discounts widening, CBD and Docklands apartment listings rising, outer-growth land sitting unsold, and family suburbs losing bidder depth.

Based on recent Melbourne history, a realistic downturn could mean a 5% to 10% fall from mid-2026 values, with weaker apartments and high-debt outer houses more exposed than scarce inner-family homes.

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 this source matters	How we used it
Australian Bureau of Statistics, Regional Population	It is Australia’s official population statistics agency.	We used it to understand whether Melbourne housing demand is supported by population growth. We compared population pressure with rental vacancy and housing supply.
Australian Bureau of Statistics, Building Approvals	It is the official source for new dwelling approvals in Australia.	We used it to judge whether new housing supply in Melbourne is expanding or slowing. We compared approvals with visible new-build areas such as Fishermans Bend, Box Hill and outer growth corridors.
Land.Vic Property Sales Statistics	It is the Victorian government’s official property sales source.	We used it to cross-check price movements by property type and area. We treated it as slower than live listing data but more official.
Cotality Home Value Index	It is one of Australia’s main residential price index providers.	We used it for current Melbourne value momentum, median values and yield direction. We compared it with PropTrack and Domain before writing the market outlook.
PropTrack Home Price Index	It uses large Australian listing and transaction datasets.	We used it to compare Melbourne with other Australian capitals. We also used PropTrack rental insights to test whether tenant demand remains tight.
Domain Melbourne Auction Results	Domain is a major Australian property marketplace with weekly auction data.	We used it to read live buyer pressure in Melbourne. We compared auction conditions with REIV and price-index data.
REIV Auction Results	REIV is Victoria’s main real estate industry institute.	We used it as a local check on Melbourne auction momentum. We treated it as a market-temperature source, not a complete valuation source.
SQM Research Vacancy Rates	SQM is a long-running Australian rental vacancy data provider.	We used it to judge rental tightness in Melbourne. We cross-checked vacancy pressure against Domain and PropTrack rental reporting.
Australian Taxation Office Foreign Buyer Guidance	It explains the official federal rules for foreign residential property buyers.	We used it to confirm what foreign buyers can and cannot buy in 2026. We paid special attention to the established-dwelling ban until 30 June 2029.
Victorian State Revenue Office Foreign Purchaser Duty	It is the official Victorian tax authority.	We used it to confirm the 8% foreign purchaser additional duty in Victoria. We combined it with federal rules to assess total friction for foreign buyers in Melbourne.
Victoria’s Big Build, Metro Tunnel	It is the official source for Melbourne’s Metro Tunnel project.	We used it to identify areas where transport access is changing. We connected the project to Arden, Parkville, State Library, Town Hall and Anzac demand.
Victoria’s Big Build, Suburban Rail Loop East	It is the official source for the SRL East project.	We used it to identify long-term demand zones such as Cheltenham, Clayton, Monash, Glen Waverley, Burwood and Box Hill. We treated the project as a long-term support, not an instant price guarantee.