The market is bifurcated, with Sorrento experiencing median house price drops of up to -3.2% (Barry Plant Dromana, early 2026). However, broader regional indicators are positive, with neighbouring Mornington, Balnarring, and Baxter in an “Accelerating Growth” phase (HtAG Analytics, March 2026). Inventory is increasing as the Short Stay Accommodation Levy prompts investors to dispose of holiday homes (Barry Plant Dromana, early 2026).
The Peninsula is currently adjusting from the COVID-era peak while simultaneously seeing a re-rating in specific hubs. Demand remains split between permanent retirees and Melbourne-based weekend buyers, creating different price pressures across the coastal strip.
The growth trajectory for the region
Mornington, Balnarring, and Baxter have entered the “Accelerating Growth” phase of the property cycle (HtAG Analytics, March 2026). Historically, suburbs in this phase maintain momentum for 12–18 months. This suggests a broader Peninsula re-rating is underway despite some recent flat growth.
Impact of the Short Stay Accommodation Levy
Listings are currently dominated by ex-rental properties and holiday homes being sold due to increased land tax, interest rates, and the new state levy (Barry Plant Dromana, early 2026). Properties priced above $1 million continue to sell well and often exceed expectations. Entry-level properties under $1 million are currently offering value opportunities as the market adjusts.
Sale methods in Rosebud and Sorrento
Private treaty remains the dominant sale method across the Peninsula. Auctions are used selectively in Rosebud and Mornington for properties priced between $700,000 and $1.2 million where buyer competition is high. Most listings exceeding $1.5 million utilize private treaty or Expressions of Interest (EOI).
The appraisal spread
There is a notable gap between the performance of entry-level stock and premium coastal assets. While the lower end is correcting from the pandemic boom, the high end remains resilient due to a stable owner-occupier base and geographical supply constraints.
| Suburb | Median House Price | Annual Growth |
|---|---|---|
| Mt Eliza | $1,692,000 | +0.9% |
| St Andrew’s Beach | $1,593,700 | +0.5% |
| Safety Beach | $1,160,700 | +0.3% |
| Mornington | $1.07M–$1.12M (CoreLogic/OpenAgent) | -2.73% to -4.11% (CoreLogic/OpenAgent) |
Frequently asked questions
Is it a good time to sell a holiday home on the Peninsula?
Investors are currently listing holiday homes due to the Short Stay Accommodation Levy and rising land tax (Barry Plant Dromana, early 2026). However, properties priced above $1 million are performing well and frequently selling above expectations, suggesting strong demand for premium coastal assets.
Why have some Peninsula suburbs seen price drops?
Several suburbs, including Sorrento and Mornington, recorded median house price drops of up to -3.2% in early 2026 (Barry Plant Dromana). This reflects a market adjustment and correction following the significant price increases seen during the COVID-19 period.
Should I use an auction or private treaty in Rosebud?
Private treaty is the standard for the Peninsula. However, auctions are effective in Rosebud for properties between $700,000 and $1.2 million where there is broad family appeal and high buyer competition. Higher-end properties typically perform better via private treaty or EOI.
What is the rental market like for Peninsula investors?
The rental market remains extremely tight, with Mornington recording a vacancy rate of 0.6% (HtAG Analytics, March 2026). While the short-stay levy is impacting some investors, the lack of available long-term rental stock continues to support overall investor appeal.
Questions to ask your agent
- How is the Short Stay Accommodation Levy specifically impacting the buyer pool for my property type?
- Given the “Accelerating Growth” phase in nearby suburbs, how should we timing the listing to capture this momentum?
- Does the current level of buyer competition for my price bracket justify an auction, or is a private treaty more appropriate?
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.