Melbourne’s South East is currently outperforming the broader city median, with Frankston, Kingston, Dandenong, and Knox appearing in the top 10 highest-growth regions (Cotality/OpenAgent, January 2026). This reflects a two-speed market where affordable outer-suburban houses are seeing sustained price growth, though rate hikes in February and March 2026 have introduced new uncertainty.
Buyers are increasingly targeting outer corridors to get ahead of expected first-home buyer grant activity. This has created a divergence between the softer conditions for inner-city high-density apartments and the resilience of the South East residential market.
Which South East regions are growing fastest?
Frankston has held the top growth position for six consecutive months, with a median of $856,746 and annual growth of 14.3% (Cotality/OpenAgent, January 2026). Kingston and Dandenong follow with annual growth of 8.8% and 8.5% respectively (Cotality/OpenAgent, January 2026).
Where is gentrification impacting value?
Frankston and Cheltenham are showing clear gentrification signals, such as architect-designed extensions to heritage homes and specialty retail replacing older shops. These specific areas are seeing price appreciation of 8–15% over a two-to-three-year period.
How does Melbourne’s value compare to other capitals?
The median house price gap between Melbourne and Sydney now exceeds $600,000. Melbourne’s median has dipped below Perth’s and sits only marginally above Adelaide’s, which is historically unusual for Australia’s second-largest city.
The interest rate risk
Rate hikes in February and March 2026 have introduced uncertainty after a strong 2025, where Melbourne median house prices increased by approximately 11–14%. The market is now adjusting to these higher borrowing costs following the early 2024 trough.
| Region (South East) | Median Price (Jan 2026) | Annual Growth |
|---|---|---|
| Frankston | $856,746 | +14.3% |
| Kingston | $1,085,527 | +8.8% |
| Dandenong | $794,550 | +8.5% |
| Knox | $965,300 | +7.6% |
Frequently asked questions
Why is the price gap between Melbourne and Sydney so wide?
Melbourne experienced a price correction of 8–10% between 2022 and 2023 due to RBA rate increases and additional Victorian land tax measures. This caused Melbourne to correct more than most other capital cities, resulting in a median price gap with Sydney exceeding $600,000.
Which South East suburbs are showing signs of gentrification?
Frankston and Cheltenham are the primary South East areas showing gentrification. This is evidenced by a demographic shift toward younger professionals, warehouse conversions, and the replacement of older shops with specialty retail, leading to price appreciation of 8–15% over two to three years.
How have Melbourne house prices performed over the last five years?
Following record growth in 2020–2021, the market corrected 8–10% in 2022–2023. After hitting a trough in 2024, prices recovered strongly in 2025 with an increase of approximately 11–14%, before February and March 2026 rate hikes introduced new volatility.
Are new-build properties putting downward pressure on South East prices?
No. While new-builds make up 15–20% of all Melbourne residential listings, they are concentrated in the CBD, Southbank, Docklands, Fishermans Bend, and Maribyrnong. They are not spread across the outer suburban corridors of the South East.
Questions to ask your agent
- How is the “two-speed market” affecting the specific buyer profile for my property compared to inner-city trends?
- What specific gentrification signals are you seeing in my immediate street or pocket that could justify a higher price point?
- How have the February and March 2026 rate hikes changed the number of qualified buyers attending open for inspections in this 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.