Frankston has seen the strongest growth in the South East, recording 14.3% annual growth with a median price of $856,746 (Cotality, January 2026). Other high-growth South East regions include Kingston (+8.8%), Dandenong (+8.5%), and Knox (+7.6%) (Cotality, January 2026).
The South East recovery is being driven by a combination of affordability and gentrification. While Melbourne house prices increased approximately 11–14% over 2025, rate hikes in February and March 2026 have introduced new uncertainty into the market.
Which regions are leading the South East growth?
Frankston has held the top position for growth for six consecutive months, with an annual increase of 14.3% (Cotality, January 2026). Buyers are increasingly drawn to gentrification signals in Frankston and Cheltenham, where specialty retail is replacing older shops and heritage homes are receiving architect-designed extensions.
What is driving the affordable segment?
House prices in outer suburbs are increasing as investors and first-home buyers enter the market. Dandenong (+8.5%) and Knox (+7.6%) remain strong performers (Cotality, January 2026), reflecting a broader trend where affordability-driven suburbs led the recovery following the 2022–2023 price correction (CoreLogic/Cotality).
How does Melbourne compare to other capitals?
The median house price gap between Melbourne and Sydney now exceeds $600,000, which is a historically wide discount. Melbourne’s median has recently dipped below Perth’s and sits marginally above Adelaide’s, an unusual occurrence for Australia’s second-largest city.
The interest rate uncertainty
Rate hikes in February and March 2026 have created a shift in buyer sentiment. While the 2025 recovery was strong, these recent moves make it harder to predict immediate price direction as borrowing capacity tightens.
| South East Region | Median Price | 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
What is driving the price growth in Frankston?
Growth is linked to clear gentrification signals, including a demographic shift toward younger professionals and warehouse conversions. The area is seeing specialty retail replace older shops and a trend of heritage home renovations with architect-designed extensions, leading to price appreciation of 8–15% over 2–3 years.
Is Melbourne’s property market undervalued compared to Sydney?
Yes, there is a historically wide discount between the two cities, with the median house price gap exceeding $600,000. This discrepancy, combined with Melbourne’s median sitting marginally above Adelaide’s and below Perth’s, suggests a significant valuation gap compared to other major Australian capitals.
How have recent interest rate changes affected the market?
After a strong recovery in 2025 where median prices rose 11–14%, rate hikes in February and March 2026 have introduced uncertainty. This follows a period of correction between 2022 and 2023, where Victoria’s additional land tax measures also added downward pressure on prices.
Which types of properties are performing best in the affordable segment?
House prices in outer suburbs are increasing as first-home buyers and investors enter the market. Additionally, apartment prices in Melbourne have been increasing recently, along with villa units in inner suburbs, as buyers seek more affordable entry points into the city.
Questions to ask your agent
- How many of the recent sales in this pocket were bought by first-home buyers versus investors?
- What is the specific price premium currently being achieved for heritage renovations compared to original condition homes in this street?
- How has the volume of qualified buyers changed since the rate hikes in February and March 2026?
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.