Melbourne’s South East is currently among the city’s highest-growth regions, with Frankston leading the city with 14.3% annual growth (Cotality, January 2026). Median prices in the South East vary by corridor, ranging from $794,550 in Dandenong to $1,085,527 in Kingston (Cotality, January 2026).
The South East is currently outperforming many other metropolitan regions, driven by a combination of gentrification and affordability-led recovery. This trend follows a strong 2025 where Melbourne median house prices increased between 11% and 14%.
Growth rates compared to other regions
South East suburbs feature heavily in the top 10 highest-growth regions. Frankston has held the top position for six consecutive months with 14.3% growth, while Kingston and Knox have seen annual increases of 8.8% and 7.6% respectively (Cotality, January 2026). This compares to other growth hubs like Brimbank at 10.0% and Heidelberg at 25.9% (Cotality, January 2026; Domain).
The impact of gentrification
Frankston and Cheltenham are showing clear signals of gentrification, including a demographic shift toward younger professionals and the replacement of older shops with specialty retail. Heritage home renovations and architect-designed extensions are becoming common in these pockets. These factors have contributed to price appreciation of 8–15% over the last two to three years.
Affordability and outer suburb demand
Demand remains strong for houses in the affordable segment under $800,000, particularly in outer South East areas like Dandenong, where the median is $794,550 (Cotality, January 2026). First-home buyers and investors are increasingly active in these outer corridors, contributing to price increases in detached housing.
The interest rate uncertainty
Rate hikes implemented in February and March 2026 have introduced new uncertainty into the market. Buyers are more cautious with their borrowing capacity, which may affect how quickly the growth seen in 2025 is sustained across the South East.
| Region (South East) | Median Price | Annual Growth |
|---|---|---|
| Frankston | $856,746 | +14.3% |
| Kingston | $1,085,527 | +8.8% |
| Knox | $965,300 | +7.6% |
| Dandenong | $794,550 | +8.5% |
Frequently asked questions
How does Melbourne’s house price growth compare to other capitals?
Melbourne’s median house price is currently more than $600,000 lower than Sydney’s. Historically, Melbourne’s median has sat above Perth and Adelaide, but it has recently dipped below Perth and is now only marginally above Adelaide. Growth in Perth is forecast to slow to 1.6% in 2026 (KPMG).
Which South East suburbs are gentrifying?
Frankston and Cheltenham are showing clear gentrification signals in early 2026. This is evidenced by warehouse conversions, heritage renovations, and a shift toward younger professional demographics. These areas have experienced price appreciation of 8–15% over a two to three year period.
What is happening to prices for homes under $800,000?
Results are mixed across the city. Some areas faced declines due to oversupply, but house prices in outer suburbs are increasing as first-home buyers and investors enter the market. This is visible in the South East, with Dandenong recording a median of $794,550 (Cotality, January 2026).
Did Melbourne’s market recover after the 2022 correction?
Yes. After a correction of 8–10% in 2022–2023 caused by RBA rate hikes and Victorian land tax measures, the market hit a trough in 2024. Recovery was led by affordability-driven suburbs, and median house prices increased by approximately 11–14% over 2025.
Questions to ask your agent
- Which specific streets in my suburb are showing the gentrification signals, such as architect-designed extensions or professional demographic shifts?
- How have the February and March 2026 rate hikes changed the buyer profile and borrowing capacity for properties in my price bracket?
- What does the current comparable sale data show for detached houses versus villa units in this specific pocket of the South East?
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.