Melbourne’s eastern suburbs exhibit higher resilience than inner-city high-density sectors, with regions like Whitehorse East (+8.6%) and Knox (+7.6%) appearing in the top 10 highest-growth regions (Cotality, January 2026). While inner-city apartments face softer conditions, residential houses in the east are supported by strong population growth and a significant price discount compared to other capital cities.
The Melbourne market has split into a two-speed dynamic where house-and-land assets in outer and eastern corridors are outperforming the city median. Buyers are increasingly avoiding high-density inner-city stock in favour of established residential suburbs.
Regional growth performance
Growth is concentrated in specific residential pockets rather than across the whole city. In the east, Heidelberg has seen year-on-year growth of +25.9% (Domain), while Whitehorse East and Knox have recorded annual growth of +8.6% and +7.6% respectively (Cotality, January 2026).
Melbourne’s position against other capitals
Melbourne currently offers a historically wide discount, with a median house price gap exceeding $600,000 compared to Sydney. As growth is forecast to slow sharply in Brisbane, Perth, and Adelaide from 2026–2027—with Perth’s growth projected at just 1.6% for 2026 (KPMG)—Melbourne’s relative value is attracting attention.
Rental demand and population drivers
Victoria is recording Australia’s fastest population growth driven by interstate and overseas migration. This has pushed rental vacancy rates across Greater Melbourne to between 1.4% and 2.0% (Bamboo Routes, early 2026), creating a floor for property values through sustained rental demand.
The supply gap
There is a persistent mismatch between housing delivery and population needs. Demand is expected to average 38,000 units per annum over the next five years, while apartment delivery will average only 9,000 per annum between 2025 and 2030 (CBRE).
| Region (January 2026) | Median Price | Annual Growth | Source |
|---|---|---|---|
| Whitehorse East | $1,239,067 | +8.6% | Cotality |
| Knox | $965,300 | +7.6% | Cotality |
| Heidelberg | Not listed | +25.9% | Domain |
Frequently asked questions
How does Melbourne’s house price compare to Sydney’s?
Melbourne is currently trading at a historically wide discount. The median house price gap between the two cities exceeds $600,000. This valuation gap makes Melbourne more accessible for buyers compared to the Sydney market, despite Melbourne being Australia’s second-largest city.
Are apartments in Melbourne a viable investment in 2026?
Inner-city high-density apartments are experiencing softer conditions compared to houses. However, there is strong rental growth, with median apartment rents across Australian capitals likely to grow 24% between 2025 and 2030 (CBRE), supported by low vacancy rates in Melbourne.
Which eastern suburbs are seeing the most growth?
Based on January 2026 data, Heidelberg has seen the most significant growth at +25.9% (Domain). Other strong performing eastern regions include Whitehorse East with +8.6% and Knox with +7.6% annual growth (Cotality, January 2026).
What is driving the current demand for housing in Victoria?
Demand is being driven by Victoria having the fastest interstate and overseas migration-driven population growth in Australia. This is reflected in low rental vacancy rates of 1.4–2.0% (Bamboo Routes, early 2026) and a shortfall in new housing completions (CBRE).
Questions to ask your agent
- How does the current demand for my specific property type compare to the softer performance of inner-city high-density stock?
- Which recent comparable sales in our suburb reflect the growth trends seen in the Whitehorse East or Knox corridors?
- How is the current 1.4–2.0% city-wide vacancy rate impacting the rental yield and buyer appetite for my property?
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.