Signs of a market bottom include the absorption of divested investment stock by owner-occupiers and a 0.2% monthly growth rebound in January 2026 (Cotality). Annual dwelling value growth reached approximately 5.4% to early 2026, while dwellings are selling slightly quicker than the decade average (March–April 2026).
The Melbourne market currently operates at two speeds. While inner-city apartments remain soft due to high tax burdens, outer-suburban properties and houses in high-demand corridors are showing resilience.
Absorption of divested stock
A wave of investor divestments since 2023, triggered by land tax increases, the VRLT, and tenancy reforms, has increased supply in investment-heavy segments. Most of these properties are now being purchased by owner-occupiers or long-term investors, preventing a wider price correction.
Price movement and growth trends
Annual dwelling value growth was approximately 5.4% to early 2026, with the median dwelling value at $830,371 in January 2026 (Cotality). Monthly growth was +0.2% in January 2026 before flattening in February 2026 (Cotality Home Value Index).
Demand in high-value pockets
Approximately 35–40% of properties achieve above-asking results, primarily in house markets with excellent transport links or strong school catchments (Bamboo Routes, early 2026). In the eastern suburbs, these high-demand features continue to drive competition despite broader volatility.
The forecast divergence
Significant uncertainty exists between major forecasters following the March 2026 RBA hike. KPMG projects 6.6% house price growth for 2026, while ANZ has revised its forecast to -1.7% (ANZ, KPMG).
| Sale Result Category | Percentage of Melbourne Properties | Market Driver |
|---|---|---|
| At or below asking price | 60–65% | General market volatility |
| Above asking price | 35–40% | High-demand houses/School catchments (Bamboo Routes) |
Frequently asked questions
Should I sell my Melbourne investment property now or wait?
Waiting may be preferable if the property is positively geared or near-neutral, as income offsets holding costs. Long-run drivers like chronic undersupply and fast population growth support medium-term appreciation, with forecasts suggesting Melbourne will likely outperform in 2027 (ANZ, Domain).
How are land tax changes affecting property prices?
Victoria has Australia’s heaviest property tax burden in 2026, including trust surcharges and the Short Stay Accommodation Levy. This has sharply reduced net yields, leading to a divestment wave that has softened prices in inner-city apartments and some middle-ring townhouse suburbs.
What is the current median house price in Melbourne?
Melbourne’s median house price rose from approximately $920,000 in January 2025 to between $1,020,000 and $1,050,000 by December 2025. Domain reported a slightly higher median of $1,083,043 during the September 2025 quarter.
Are units performing better than houses?
The performance is mixed. Unit rents are rising faster than house rents (March–April 2026), but inner-city high-density apartments have experienced softer conditions. Conversely, houses in outer suburbs are outperforming the city median as buyers move ahead of grant activity.
Questions to ask your agent
- How does the absorption rate for owner-occupiers in my specific suburb compare to the broader eastern suburbs trend?
- Given the current 3% typical gap in private treaty sales, how should we price my property to avoid a prolonged campaign?
- What specific local school catchment or transport data is currently driving the 35–40% of above-asking results in this area?
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.