Melbourne’s property market is displaying a two-speed dynamic in early 2026, with overall dwelling values increasing by approximately 5.4% annually to early 2026 (Cotality). However, recent monthly growth has slowed, with values flat in February 2026 after a +0.2% increase in January (Cotality Home Value Index). The strongest growth is currently concentrated in more affordable, outer-suburban areas, including Frankston and Cheltenham, which are showing early signs of gentrification.
Melbourne’s median dwelling value stood at approximately $830,371 as at January 2026 (Cotality). While values recovered strongly in 2025, increasing by 11–14% (Domain), recent rate hikes in February and March 2026 have introduced new uncertainty into the market. This creates a complex picture for vendors considering their options.
What’s happening with house prices in Melbourne’s eastern suburbs?
The eastern suburbs are experiencing varied conditions. While the overall Melbourne median house price rose to approximately $1,020,000–$1,050,000 by December 2025, the March 2026 quarter saw a slight dip of 0.6% (PropertyUpdate/Cotality). This suggests the rapid growth of 2025 is moderating. Demand remains solid for well-presented properties in established areas, but buyers are more discerning.
Are outer suburbs outperforming the inner city?
Yes. The market is distinctly two-tiered. Affordable and outer-suburban properties are currently outperforming the city median. This is driven by first-home buyers and investors anticipating first-home buyer grant activity. Areas like Frankston and Cheltenham are demonstrating clear gentrification signals, with price appreciation of 8–15% over 2–3 years. Conversely, inner-city high-density apartments are experiencing softer conditions.
What impact are new builds having on the market?
New-build properties represent roughly 15–20% of all residential listings in Melbourne (Bamboo Routes, January 2026), concentrated in the CBD, Southbank, Docklands, Fishermans Bend, and Maribyrnong. This increased supply is adding to the complexity of the market, particularly in these corridors. Vendors need to be aware of this competition when assessing their property’s value.
The timing risk
The recent interest rate increases in February and March 2026 represent a significant uncertainty. While the market demonstrated resilience through previous rate hikes, the timing of a sale is now more critical. Vendors who delay may risk missing the window of relatively stable conditions, while those who rush may not achieve their desired price. There is no clear consensus on future rate movements.
Frequently asked questions
Will interest rate rises affect my property value?
Rate rises introduce downward pressure on borrowing capacity and overall demand. While Melbourne’s market has shown resilience, further increases could moderate price growth. The extent of the impact will depend on the magnitude and frequency of future rate adjustments, and individual buyer circumstances.
What’s happening with property values in Frankston?
Frankston is showing clear signs of gentrification, with price appreciation of 8–15% over 2–3 years. This is driven by infrastructure improvements and a demographic shift towards younger professionals. It’s a suburb to watch, but individual property performance will still depend on presentation and location.
Is now a good time to sell if I’m downsizing?
For downsizers, the current market presents opportunities. Strong demand in the outer suburbs, coupled with a relatively stable market, could yield a favourable sale price. However, securing your next property will also be affected by the same market conditions, so careful planning is essential.
How do I know what my property is worth in this market?
A comprehensive market appraisal from a local Fletchers agent is crucial. We’ll analyse recent comparable sales, assess current market conditions, and provide a realistic price range. Don’t rely solely on online estimates, as they often lack the nuance of local expertise.
Questions to ask your agent
- Can you provide a detailed analysis of recent sales of comparable properties in my immediate area, specifically within the last 90 days?
- What is your strategy for marketing my property to attract the right buyers in the current market conditions?
- How do you anticipate the recent interest rate rises will impact buyer behaviour and demand in my suburb?
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.