Melbourne Housing Market Forecast: Property Outlook for 2026–2027

Melbourne’s property market has become more balanced in 2026. After a period of stronger growth, recent data shows some moderation in prices, which means buyers need to pay close attention not only to the market, but also to borrowing capacity, repayments and the type of property they are considering.

Domain’s June Quarter 2026 House Price Report puts Melbourne’s median house price at $1.041 million, down 3.1% over the quarter and now slightly below where it was a year ago. Units held up better, at $587,137, down only marginally over the quarter and still 1.7% higher annually. 

Whichever way this moves next, it’s worth remembering that a single quarter doesn’t tell you where a suburb or a purchase will land. What matters more is what you can afford and comfortably repay.

Key takeaways

• Melbourne’s median house price is $1.041 million, down 3.1% over the June 2026 quarter, the steepest quarterly fall in almost four years.
• Annual house price growth has turned negative (-0.4%) for the first time in 15 months.
• The median unit price is $587,137, still up 1.7% over the year.
• The RBA cash rate is 4.35%, unchanged since May 2026 after three hikes earlier in the year.
• Victoria’s population grew 117,300 (1.7%) in the year to December 2025, supporting underlying demand.

• Dwelling approvals in Victoria remain uneven month to month, though supply is trending up over 2026.

  <Data Visualisation – Needs to be updated based on above data>

  

What is the Melbourne housing market forecast for 2026–2027?

Melbourne’s current position

Melbourne’s median house price is now 4.2% below its December 2025 peak. That’s a meaningful pullback, but it follows more than three years of largely uninterrupted growth across the combined capital cities, a run that ended nationally in this same June quarter, when combined capital house prices fell 1.4% overall.

Why Melbourne property forecasts differ

Forecasts vary because different providers use different datasets, assumptions and timeframes. That’s exactly why we don’t lead with a prediction here. What we can tell you is what’s happened so far: growth has clearly slowed, and Melbourne, Sydney and Canberra are now the three capitals recording price falls, while several others are still rising. 

What that means for your specific purchase depends far more on your borrowing position than on a national or even a city-wide average.

Will Melbourne property prices rise or fall in 2026?

The answer will likely vary by property type, location and price segment, and the past quarter has shown just how much things can shift. Adelaide’s house prices jumped 4.8% in the June quarter, pushing it past Melbourne to become Australia’s fourth most expensive capital city for houses. 

It is a reminder that capital-city rankings move faster than most people expect, and headline comparisons between cities can go stale within a single quarter.

For buyers, this creates a market where negotiating conditions may matter as much as headline price movement. Rather than assuming all Melbourne properties will follow the same trend, consider:

• Property type and price point
• Suburb-level supply and demand
• Auction and private-sale conditions
• Local employment and infrastructure
• Borrowing capacity and interest rates
• The availability of comparable properties

How will interest rates affect Melbourne house prices through 2027?

Interest rates remain one of the biggest variables for Melbourne’s property market because they directly influence borrowing capacity and mortgage repayments.

The RBA cash rate has been 4.35% since 6 May 2026, following three increases earlier in the year. The Board held rates at both its June and August meetings, with its next decision due on 29 September 2026, and has flagged that inflation is still running above its target band.

Interest rates affect repayments, but more importantly, they can also materially change borrowing capacity. This is why understanding your borrowing position before becoming too committed to a particular suburb or property is so important.

For someone planning to buy in Melbourne, the more useful question is therefore not simply “Where will rates go?” but “What could I comfortably afford if rates move in either direction?” 

What is driving current Melbourne real estate market trends?

Several factors are shaping Melbourne’s property outlook.

Population growth

Victoria’s population grew by 117,300 people, or 1.7%, in the year to December 2025, supporting underlying housing demand. Net overseas migration was the largest contributor to population growth, adding 85,044 people, while net interstate migration was slightly negative at 685 people.

Population growth supports underlying housing demand, particularly where new residents need to rent or purchase homes.

Housing supply

Housing supply is running in different directions depending on which measure you look at. In July 2026, Victoria recorded 4,642 total dwelling approvals (seasonally adjusted), up 9.7% on the month, but private-sector house approvals fell 4.1% to 2,939 over the same period. 

Approvals don’t translate directly into completed dwellings, and a rise in total approvals alongside a fall in house approvals suggests more of the pipeline is now medium and higher-density stock rather than standalone houses.

What should you look for when assessing a Melbourne suburb?

When shortlisting suburbs in Melbourne, home buyers should look closely at local supply, recent comparable sales, days on market, rental demand, infrastructure and the type of property they are considering.

Inner, middle and outer Melbourne can behave quite differently at the same point in the cycle. Established inner suburbs tend to benefit from employment, transport and amenity, while middle and outer areas often attract buyers seeking affordability. Growth corridors can see stronger population demand but also face more new supply, which can cap price growth even where demand is strong.

Useful indicators for any suburb you’re considering:

• Recent comparable sales
• Listings and days on market
• Auction clearance conditions
• Rental demand and vacancy rates
• New housing supply
• Infrastructure and local employment 

Strong past growth does not necessarily make a suburb the right choice for every buyer.

What does the Melbourne property outlook mean for different buyers?

First home buyers

Before focusing on which suburb to buy in, we generally look at borrowing capacity, deposit, purchasing costs and what repayments would look like at different rates

Investors

For investors, we also look at how the lender treats rental income, existing debts and available equity, as these can affect how much you can borrow for the next property.

Refinancers

We look at the potential saving after switching costs, the remaining loan term, lender policy and whether the new loan structure actually improves your position.

Upgraders

Your borrowing position also needs to account for the existing property, outstanding debt, available equity and whether you need to sell before buying.

Self-employed borrowers

Understand how lenders assess business income before making an offer, as different policies can produce different borrowing capacities.

How can you improve your borrowing power in a changing market?

Property forecasts are useful for understanding market conditions, but your borrowing position ultimately determines what you can afford. Before making an offer:

1. Review your income, expenses and existing debts 
2. Calculate your deposit and purchasing budget
3. Allow for purchase costs and changing interest rates
4. Obtain pre-approval before seriously negotiating on a property.

What we see regularly is that two borrowers with similar incomes can receive very different borrowing outcomes depending on the lender, their existing debts, how their income is assessed and the structure of the loan. Understanding lender policy before making an offer can help you establish a realistic purchasing range rather than relying on a generic borrowing estimate. Our Borrowing Power Calculator can give you a starting point before that conversation.

Is now a good time to buy property in Melbourne?

There is no universal answer. Melbourne’s property outlook remains mixed, with prices now slightly below year-earlier levels and quarterly falls extending into a second quarter.

Trying to pick the exact bottom of the Melbourne property market is less important than buying the right property at a price you can comfortably afford and holding it for the appropriate timeframe. For financially prepared buyers, affordability, suitability and long-term plans matter more than trying to predict the exact market bottom.

Melbourne housing market myths to reconsider

“Melbourne property prices always fall when rates rise”

Not necessarily, and the opposite can be true too. Melbourne’s June quarter falls happened three months after the RBA’s last rate rise, while rates held steady, not moved.

“A market forecast tells me when to buy”

Forecasts provide scenarios, not certainty. Different providers can reach different conclusions because they use different assumptions, timeframes and datasets.

“I need to wait for prices to fall before buying”

Waiting may make sense if your finances aren’t ready, but delaying solely for a predicted price fall could mean missing suitable properties or facing different borrowing conditions later.

Frequently Asked Questions