In 2026, a property valuation relies heavily on recent comparable sales, with agents analysing properties sold within your suburb in the past 6–12 months. Land size remains a key driver of value, particularly in Melbourne’s middle and outer rings. While Melbourne experienced strong recovery in 2025 (approximately 11–14% growth – (Domain)), recent rate hikes in February and March 2026 have introduced new uncertainty into the market.
Determining your home’s value is a complex process, even for experienced agents. It’s no longer simply about looking at recent sales; it’s about interpreting those sales in the context of a shifting economic landscape and evolving buyer preferences. The strong recovery seen throughout 2025 is now being tempered by the impact of interest rate increases, creating a more nuanced market.
What data does an agent actually use?
Agents begin with comparable sales – properties similar to yours in your suburb that have sold within the last 6–12 months. They’ll consider land size (particularly important in outer and middle rings), the number of bedrooms and bathrooms, and features like garage accommodation. The quality of renovations, especially to kitchens and bathrooms, significantly impacts value, as does the property’s overall condition and orientation. (Cotality, January 2026)
How much does the location matter?
Location remains paramount. Melbourne’s eastern suburbs, Mornington Peninsula, and Bellarine Peninsula each have their own dynamics. In the more affordable segment (under $800,000), apartments and entry-level houses in outer suburbs are seeing mixed results, with some areas benefiting from first-home buyer incentives while others face oversupply. However, house prices in outer suburbs are increasing as investors and first-home buyers enter the market. (REIV)
What about market trends – how do they factor in?
Understanding the recent market history is crucial. Melbourne experienced record growth in 2020–2021, followed by a correction of 8–10% in 2022–2023 as the RBA raised rates and Victoria introduced additional land tax measures. 2024 saw a trough and early recovery, with affordability-driven suburbs leading the way. While 2025 was a strong year for price growth, the February and March 2026 rate hikes have introduced a new level of caution. (PropTrack)
The real uncertainty – the appraisal spread
The biggest challenge right now is the widening ‘appraisal spread’ – the difference between the price range an agent suggests and what a buyer is ultimately willing to pay. Rate rises are impacting buyer borrowing capacity, and while demand remains, it’s more sensitive to price. This means properties are taking longer to sell, and achieving the initial price expectations is becoming more difficult.
Frequently asked questions
Will rising interest rates affect my property value?
Yes, rising interest rates can moderate price growth. The February and March 2026 rate hikes have already introduced uncertainty. Reduced borrowing capacity impacts buyer demand, potentially leading to longer selling times and a need to adjust price expectations. (RBA)
How important is a renovated kitchen?
Kitchen and bathroom renovations generally deliver the highest return on investment. Buyers place a high value on modern, functional spaces. However, ensure renovations align with the property’s overall style and the expectations of buyers in your area.
What if my property is unique?
‘Unique’ features – such as period character, ceiling height, or natural light – can add value, particularly in inner Melbourne. An agent will identify comparable properties with similar attributes to accurately assess their impact on your property’s worth.
How often should I get a property valuation?
Given the current market volatility, it’s wise to review your property’s value every 6–12 months, or sooner if there are significant changes in the local market. A current valuation provides a realistic benchmark for future decisions.
Questions to ask your agent
- How many properties have you sold in this specific suburb in the past 12 months, and what was the average days on market for those properties?
- Can you provide a detailed breakdown of how you arrived at your price estimate, including the comparable sales you used and how you adjusted for differences?
- What is your post-campaign strategy if the property passes in at auction – and what are the likely outcomes in the current market?
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.