Melbourne’s Housing Market Is Worth Watching—Here’s Why

Melbourne is quickly becoming one of the most talked-about housing markets in the country—and not because prices are soaring.

While most Australian capitals have seen dramatic growth over the past five years, Melbourne’s property values have climbed at a far slower pace. This has shifted the city from one of the nation’s most expensive markets to one of its most affordable, creating a stark contrast with cities like Sydney, Brisbane, and Perth.

Recent property data shows Melbourne’s dwelling values rose by just over 15 per cent across five years. During the same period, Brisbane, Adelaide, and Perth all recorded growth of around 80 or 90 per cent, highlighting just how differently Melbourne’s market has evolved.

Melbourne’s median house value is hovering around the $1 million mark—still significantly lower than Sydney’s, where the median sits more than $600,000 higher. For a city that once rivalled Sydney at the top end of the market, Melbourne is now officially the most affordable of the major capitals.

There’s no single reason Melbourne’s market has softened—it’s a combination of factors. Higher land taxes and stricter tenancy laws have increased the cost of holding investment properties, prompting many landlords to sell. At the same time, Melbourne hasn’t experienced the same surge in interstate migration as Brisbane or Perth, reducing buyer demand.

Over the longer term, the city’s strong housing delivery pipeline has also played a role. More homes built across the past decade have helped stabilise prices, even as other capitals have faced shortages.

The flow-on effects have been significant. With fewer investors in the market, first-home buyers are now taking up a larger share of new housing loans in Victoria. Renters have also seen comparatively gentler increases, with Melbourne’s rental growth sitting below the national average.

Analysts expect this steadier trend to continue through 2026, positioning Melbourne as the country’s most closely watched (and most accessible) housing market.

Image credit: Visit Melbourne | Instagram