4.35% Cash Rate · 3 Hikes in 2026/54.9% Final Clearance (CoreLogic)/All 2025 Cuts Reversed/5 Buyer Type Breakdown/Forecasts: CBA · ANZ · Westpac
$822kMedian dwelling↓ 1.9% from Nov peak
54.9%Final clearance rateCoreLogic, wk 26 Apr
−0.8%Houses MoM (Apr)Cotality / CoreLogic 2026
4.9%Gross unit yieldvs 3.2% for houses
01 The Rate Cycle
Three hikes. The full picture.
February to May 2026: the RBA reversed every 2025 cut in four months. Understanding the sequence explains why different buyer cohorts are in very different positions.
Feb – Dec 2025
3 cuts → 3.60%
Melbourne recovery. Clearance above 70% in eastern suburbs by spring. The starting point this cycle reversed from.
4 Feb 2026 · +25bp
Hike 1 → 3.85%
CPI picked up sharply. Trimmed mean hit 3.7%. Premium buyers pulled back immediately. Upper-quartile stock started to accumulate.
18 Mar 2026 · +25bp
Hike 2 → 4.10%
Voted 5–4. Hormuz disruptions a factor. Melbourne final clearance broke below 60%. Days on market extended across $1.5M+.
5 May 2026 · +25bp
Hike 3 → 4.35%
Voted 8–1. CPI 4.6%. All 2025 cuts reversed. CBA calls pause. Westpac sees two more. Every 25bp removes ~$50k borrowing on a $1M loan.
Monthly price change · Jan–Apr 2026
Dwellings
Houses
Units
Source: Cotality/CoreLogic HVI · Annual +2–3% headline = 2025 carry-forward, not current trend.
Clearance rate: preliminary vs final · 2026
Preliminary
Final (CoreLogic)
Final figures include all scheduled auctions. REIV (reported-only) shows 70%+. CoreLogic final is the reliable signal.
02 Data Check
Four claims fact-checked.
The Melbourne market narrative in May 2026 is running ahead of the data. Four things being said that the numbers don’t support.
“Melbourne up 2–3% annually — positive market.”
Wrong
Monthly trend since Nov 2025: −0.1%, 0.0%, −0.2%, −0.6%. Four consecutive falls. The annual figure is 2025 carry-forward momentum, not current direction.
“Clearance ~60% — near balanced market.”
Overstated
Preliminary prints 60–62%. Final CoreLogic: 54.9% (week of 26 Apr). REIV reports 70%+ — different methodology using reported-only auctions.
“Units and houses performing similarly.”
Misleading
Houses −0.8% in April. Units −0.1%. Upper-quartile houses −1.9% in the March quarter alone. These are two distinct markets with different buyer profiles.
“Listings 12% above average — buyers have choice.”
Overstated
New listings are −3.3% below year-ago and −6.1% below 5-year average (PropTrack). Elevated total stock = properties sitting unsold, not fresh supply entering the market.
03 By Buyer Type
Melbourne by buyer type.
Your position in the market — price point, equity, intent — determines whether May 2026 is an opportunity or a reason to wait.
Disclaimer. Forecasts and borrowing estimates are drawn from public third-party sources and carry material uncertainty. Not financial, investment, legal or tax advice. Consult a licensed adviser before acting.
🏠 First Home Buyers
⬆ Upgraders
👪 Families
↘ Downsizers
◆ Luxury
Best entry window in 3 yearsGrants confirmedBorrowing tighter
First Home Owner Grant$10,000
New dwellings ≤$750k · Victorian Budget 5 May 2026
Stamp duty exemption≤ $600k
Sliding concession to $750k · SRO Victoria (thresholds unchanged since 2017)
5% Deposit SchemeUnlimited
Income caps removed Oct 2025. Price cap $950k Melbourne/Geelong. No LMI.
To Oct 2026Off-the-plan concession
Duty on land value only. Can push dutiable value below $600k on apartments under $750k.
Active corridorsFrankston +14.3%Brimbank +10.0%Whittlesea +7.7%CraigieburnTarneit
H2 2026 Prediction
Sub-$750k expected to soften 0–2%. Entry-level grants inflate demand — eligible homes already rose 6.7% in 6 months post-expansion. Pre-approval now beats waiting for conditions that may not arrive.
Verify thresholds with SRO Victoria before signing. Off-the-plan concession expires 20 Oct 2026.
Lower quartile vs upper quartile · Apr 2026
Outer-ring annual growth leaders
Most rate-exposed cohortTiming is everythingBoth sides softening equally
Borrowing capacity lost~$130–160k
Cumulative 75bp since Nov 2025 trough. On a $1.5–2M target. Indicative only.
Inner east clearance (final)~55–57%
Hawthorn, Camberwell below city average. Pre-approved buyers: 3–6% below reserve is achievable.
Hawthorn annual−2.1%
Same correction on the buy side. The spread, not the absolute price, is what matters.
Cost of waiting (monthly)+$415
Extra monthly P&I on $1.2M loan since Nov 2025. Bear case adds another $200+.
Watch closelyHawthorn −2.1%Camberwell −1.5%Balwyn North +2.8%Doncaster +1.9%
H2 2026 Prediction
$1.5M–$2M inner east likely softens a further 1–3% before finding a floor in Q3. Upgraders who launch in May–June get a bigger buyer pool than those who wait past August. Price both sides on 60-day comps — nothing older.
Borrowing capacity figures are illustrative. APRA’s 3% serviceability buffer applies on top. Speak to a licensed broker before modelling any simultaneous sell-buy.
Cumulative price change since Nov 2025 peak
Monthly repayment · $1.2M loan at each rate
School zone premium holdingUpper quartile under pressureMore choice than 2025
Upper quartile (Mar qtr)−1.9%
Cotality/Metropole. Sharpest decline of any tier. Premium family homes above $1.5M most at risk.
Balwyn North annual+2.8%
School-zone demand is need-driven. Holds through rate cycles better than discretionary premium suburbs.
Doncaster annual+1.9%
Manningham corridor holding. Rail and school access sustaining buyer depth.
Family Home Guarantee2% deposit
Single parents, no LMI. Price cap $950k Melbourne/Geelong. Not first-home-buyer-only.
$1M–$1.6M school-zone stock is the most defensible part of the mid-market. Above $1.8M, expect 2–4% further softness before recovery. For families stretching above $2M, patience into Q4 2026 likely yields a better price.
School zone catchments change. Verify with Victorian Dept of Education before purchasing on zone basis.
School-zone vs premium suburb performance
Key threshold
Below $1.8M — school-zone premium likely to hold. Above $1.8M — enters upper-quartile territory. −1.9% in March quarter alone. Source: Cotality, Metropole April 2026
Best relative position of any cohortEquity-rich, rate-insulatedSell fast, buy slow
What they’re selling (houses)−0.8%/mth
Apr 2026. Upper quartile −1.9% in March quarter. Sell-side is the harder half.
What they’re buying (units)−0.1%/mth
Apr 2026. Near flat. Spread widening every month — in the downsizer’s favour.
Gross unit yield4.9%
vs 3.2% for houses. Rental income case for holding is strengthening.
Super downsizer contribution$300k/person
Up to $600k per couple from home sale proceeds. Complex — independent financial advice required.
List the family home in May–June, price on 60-day comps, and have the purchase pre-identified. The house-to-unit spread is widening each month. Inner-ring units $600k–$1.1M should hold value better than the market average through H2 2026.
Super contributions — eligibility depends on age, prior contributions and ownership period. CGT main residence exemption also varies. Independent financial and tax advice is essential.
Houses vs units: price divergence 2026
Yield comparison
3.2%
Houses
vs
4.9%
Units
Gross rental yield · April 2026 · Cotality
Sharpest falls citywideBest buyer position since 2019Sydney discount intact
Toorak annual change−14.5%
Fletchers April 2026. Median $4.85M. Small transaction sample — treat as directional.
Melbourne vs Sydney gap$600k+
Mosman/Vaucluse equivalents trade 40–60% above Melbourne. Widest discount in over a decade.
Buyer sentiment (Mar 2026)82.9
Westpac–Melbourne Institute “time to buy” index. New cycle low. Long-run average is 120.
Upper quartile (Mar qtr)−1.9%
Cotality broad-sample figure. More reliable than suburb-level medians at this price tier.
Watch listToorak $4.85MKooyong −6.3%Canterbury $3.5M est.Malvern $3.2M est.
H2 2026 Prediction
Off-market and pre-auction is where value sits. Motivated vendors in the $3M–$5M range are more common than auction results show. ANZ forecasts Melbourne to lead the national recovery in 2027. Under Westpac’s bear case, further 5–10% before a floor. Buy for 5+ years or don’t buy.
Premium suburb medians are based on small transaction samples — directional only. Foreign buyer additional duty of 8% applies. Legal and tax advice is essential above $2M.
Premium suburb annual price change
Source: Fletchers/Cotality April 2026. Small samples at premium end — directional guidance only.
04 H2 2026 Scenarios
Three scenarios for the second half.
Bull, base, and bear — the three major bank positions on the rate path and what each means for Melbourne property.
Bull · CBA base case4.35%
May was the last hike.
Inflation recedes through Q2
RBA pauses, cuts once by year-end
Clearance recovers to 64–67%
Melbourne prices +1–3% from current
Premium suburbs stabilise Q3
Base · ANZ / NAB consensus4.60%
One more hike in August.
June CPI stays above 4%
Clearance holds 57–61% mid-year
Melbourne prices −1% to −3% for year
Affordable corridors prove resilient
Recovery begins Q4
Bear · Westpac scenario4.85%
June and August hikes.
Middle East disruption extends
Cash rate 50bp above 2023 peak
Melbourne prices −4% to −9%
Premium suburbs −10% to −15%
SQM Scenario 2 triggers
Cash rate path · major bank forecasts
Bull (CBA)
Base (ANZ/NAB)
Bear (Westpac)
Actual to May
05 Suburb Data
The two-speed suburb story.
Affordable outer corridors and school-zone suburbs holding or growing. Premium inner-east and luxury suburbs absorbing the rate cycle hardest.
Suburb
Median
Annual
Segment
Frankston
$857k
+14.3%
First home buyers
Brimbank
$731k
+10.0%
First home buyers
Whittlesea
$782k
+7.7%
First home buyers
Knox
$965k
+7.6%
Families
Balwyn North
$2.1M
+2.8%
Families (school zone)
Doncaster
$1.45M
+1.9%
Families / upgraders
Camberwell
$2.1M
−1.5%
Upgraders
Hawthorn
$2.65M
−2.1%
Upgraders / luxury
Kooyong
$3.68M
−6.3%
Luxury
Toorak
$4.85M
−14.5%
Luxury
Source: Fletchers/Cotality April 2026. Suburb medians at premium end based on small samples — directional only.
Annual change by segment
06 Rental Market
Rental market. The other story.
While the purchase market softens, rental vacancy at 1.4% is half the 3% balanced level. Yields are rising. For investors with capacity to hold, the case is strengthening.
~1.4%
Vacancy rate · half of 3% balanced
~$660
Avg asking rent / wk (all types)
+4.4%
Annual rent growth · Melbourne
4.9%
Gross yield · units vs 3.2% houses
Rental yields by property type · April 2026
Source: Cotality April 2026. National vacancy rate fell to 1.0% in March (SQM Research). Inner-ring units on tram and rail lines are the tightest rental stock in the city.
Why units are outperforming
Units −0.1% MoM in April vs houses −0.8% — largest divergence since 2018
Gross yield 4.9% vs 3.2% for houses — yield gap widening each quarter
Inner-ring rental vacancy near zero on tram and rail lines
Downsizer buying pressure keeping values supported at $600k–$1.1M
Off-the-plan concession (to Oct 2026) creating net cost entry below $750k
Investor read for H2 2026
Purchase price correction improving yield-on-cost without rent needing to move
Rental demand structural — migration at record levels, supply constrained
Land tax and compliance costs have risen — gross yield needs to be 4%+ to net positive
High interest rates compressing short-term cash flow — hold horizon must be 5+ years
Not financial advice — consult a licensed adviser before acting on any of the above
Know where you stand in this market.
Fletchers agents across Melbourne’s eastern corridor provide complimentary property appraisals. No obligation.
This report is published by Fletchers Real Estate on Fletchers Local. For general informational purposes only. Not financial, legal, investment or tax advice. All forecasts carry material uncertainty. Consult a licensed professional before making any property decision.
Sources: Cotality/CoreLogic HVI monthly releases Jan–Apr 2026 · PropTrack April 2026 · SQM Research March 2026 · Victorian 2026–27 Budget Papers (5 May 2026) · SRO Victoria · Housing Australia · RBA 5 May 2026 · Westpac–Melbourne Institute Consumer Sentiment · ANZ Research · CBA Economics · KPMG Residential Property Outlook · Fletchers Local April 2026 · Metropole April 2026 · Dingle Partners May 2026. Published May 2026 · fletcherslocal.au/melbourne-property-report-may-2026
