Melbourne house prices are displaying mixed signals in early 2026 following two consecutive rate rises in February and March. While forecasts from KPMG, Domain, and PropTrack still point to growth of 6–8% for the year, ANZ Research has revised its outlook to a -1.7% fall, citing broader economic pressures. The median dwelling value in Melbourne was approximately $830,371 as of January 2026 (Cotality), with recent quarterly growth slowing. This creates a complex environment for both buyers and sellers.
The February and March 2026 RBA rate hikes – to 3.85% and 4.10% respectively – have undeniably introduced a new layer of uncertainty to the Melbourne property market. These increases, driven by sticky inflation around 3.8% and geopolitical factors, are impacting borrowing capacity, with a median income household losing approximately $18,000 in borrowing power from the February hike alone (Cotality). Variable interest rates are now pushing above 6% for many borrowers.
What are the forecasts for Melbourne house prices in 2026?
Forecasters are divided. KPMG projects a 6.6% rise in Melbourne house prices for 2026, with units expected to outperform at 7.1% – the highest unit growth forecast of any capital city except Darwin. Domain forecasts a median house price of around $1.17 million by year-end. However, ANZ Research, following the March rate rise, now predicts a 1.7% fall for the year, citing RBA tightening and broader economic headwinds. Long-range forecasts, like Propertybuyer’s, suggest continued growth, projecting $1.402 million by 2030 (29% from 2025 levels).
How do Melbourne’s prices compare to other capitals?
Melbourne is currently trading at a significant discount to Sydney, with the median house price gap exceeding $600,000. Historically, Melbourne’s median has also dipped below Perth’s, and sits only marginally above Adelaide’s – an unusual position for Australia’s second-largest city. While Perth’s growth is expected to slow sharply to 1.6% in 2026 (KPMG) as affordability constraints bite, Brisbane, Adelaide and Perth are all expected to slow their growth from 2026–2027.
What’s been happening with price growth in recent years?
Melbourne experienced record growth during the COVID-era (2020-2021) fuelled by low rates and stimulus. This was followed by a correction of 8–10% in 2022–2023 as the RBA began raising rates, and Victoria’s land tax measures added downward pressure. 2024 saw a trough and early recovery, with affordability-driven suburbs in the north, west, and south-east leading the charge. 2025 saw strong recovery, with median house prices increasing 11–14% annually, reaching approximately $1,020,000–$1,050,000 by December 2025. However, the March 2026 quarter saw a 0.6% drop (PropertyUpdate/Cotality).
The timing risk
The conflicting forecasts and recent rate rises create a significant timing risk for vendors. Selling now might mean leaving money on the table if the more optimistic forecasts prove correct. However, delaying could expose properties to further price corrections if ANZ’s predictions materialise. The market is clearly sensitive to economic news and RBA decisions, making accurate timing exceptionally difficult.
Frequently asked questions
What impact will the rate rises have on my property value?
The rate rises are already impacting borrowing capacity and dampening demand. While forecasts vary, ANZ Research predicts a potential price fall for 2026. The extent of any impact will depend on the broader economic conditions, inflation, and future RBA decisions. Expect increased negotiation from buyers.
Should I sell now or wait for the market to improve?
This is a complex question. If you need to sell, delaying may not be an option. If you have flexibility, monitoring market conditions closely and seeking advice from a local agent is crucial. Consider the potential for further rate rises and their impact on buyer sentiment.
Are buyers still active in the market?
Buyer activity has cooled slightly following the rate rises, but demand remains present, particularly for well-presented properties in desirable locations. Open for inspection attendance is down slightly compared to late 2025, and buyers are taking more time to make decisions.
What suburbs are performing best in the current market?
Affordability-driven suburbs in Melbourne’s north, west, and south-east led the recovery in 2024 and continue to show resilience. However, the market is highly localised, and performance varies significantly. A detailed suburb-specific analysis is essential.
Questions to ask your agent
- Can you provide a detailed comparative market analysis (CMA) for my property, showing recent sales of comparable homes in my area?
- What is your assessment of buyer sentiment in my specific suburb, and how has it changed in the last month?
- What strategies would you recommend to maximise my property’s appeal to buyers in the current market conditions?
This article contains general market information based on data current
as at April 2026. It does not constitute financial, legal, or real estate
advice specific to your property or circumstances. For an appraisal and
tailored advice, speak with a Fletchers agent in your area.