Buyer confidence is currently mixed following RBA rate hikes in February and March 2026, which have introduced new uncertainty into the market. This has created a two-speed dynamic where outer-suburban houses and affordable segments are outperforming the city median, while inner-city high-density apartments face softer conditions.
Rate hikes in early 2026 have tempered the strong momentum seen in 2025, a year where Melbourne median house prices increased approximately 11–14%. Buyers are now more cautious, with a noticeable shift in activity toward the affordable segment and outer-suburban corridors.
Is there a two-speed market in Melbourne?
Different segments are performing at varying levels. House prices in outer suburbs are increasing as investors and first-home buyers move ahead of expected grant activity, while inner-city high-density apartments have seen softer conditions. In the affordable segment under $800,000, results are mixed; some areas saw price declines due to oversupply, while others benefited from infrastructure and first-home buyer incentives.
How does Melbourne compare to other capital cities?
Melbourne remains a discounted option, with the median house price gap between Melbourne and Sydney exceeding $600,000. While other capitals have seen strong gains, growth in Perth is forecast at just 1.6% for 2026 (KPMG). Brisbane, Perth, and Adelaide are all expected to slow their growth sharply from 2026–2027.
Is new-build supply affecting established home prices?
New-build properties make up roughly 15–20% of all residential listings in Melbourne (Bamboo Routes, January 2026). However, this supply is concentrated in specific corridors including the CBD, Southbank, Docklands, Fishermans Bend, and Maribyrnong. This concentration means established homes in the eastern suburbs are less exposed to new-build oversupply than the inner-city core.
The rate hike lag
The primary uncertainty is how the February and March 2026 rate hikes will impact borrowing capacity and buyer commitment. It remains unclear if the affordability-driven demand in outer suburbs can sustain current price increases as higher monthly repayments filter through to households.
Frequently asked questions
Should I sell my home in the outer eastern suburbs now?
House prices in outer suburbs are currently increasing as investors and first-home buyers enter the market. While early 2026 rate hikes have introduced uncertainty, these areas are currently outperforming the broader Melbourne median, making it a period of relative strength for affordable housing segments.
How does Melbourne’s 2026 growth look compared to Perth?
Melbourne is currently viewed as a value play due to a historically wide discount compared to Sydney. In contrast, Perth’s growth is forecast to slow to 1.6% for 2026 (KPMG) as affordability constraints bite after years of strong gains, potentially shifting investor interest back to Melbourne.
Are apartments still a viable investment in Melbourne?
The market is split. Inner-city high-density apartments have experienced softer conditions recently. However, apartment prices in Melbourne have been increasing more recently in certain areas, and villa units in inner suburbs are showing stronger price growth compared to high-rise options.
What drove the price changes in Melbourne throughout 2025?
Following a trough and early recovery in 2024 led by affordability-driven suburbs in the south-east, north, and west, the market recovered strongly. This resulted in Melbourne median house prices increasing approximately 11–14% over the course of 2025.
Questions to ask your agent
- How many first-home buyers are currently inquiring about properties in this specific price bracket compared to six months ago?
- What is the current percentage of new-build competition in our immediate pocket compared to the broader metropolitan corridors?
- How has the recent rate hike changed the bidding behaviour and offer levels of investors in this suburb over the last 60 days?
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.