Melbourne Property Market Predictions 2026 | Growth & Investment Hotspots

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Melbourne's property market is at an inflection point, and there are plenty of smart investors getting busy in Victoria’s capital.

In the past few years, the city's taken a backseat to Brisbane, Perth, and Adelaide in the capital growth stakes. Meanwhile, its perennial rival, Sydney, has been dominating the headlines.

But sometimes the best opportunities emerge when everyone's attention is focused elsewhere. It’s that old Warren Buffett mindset of being greedy when others are fearful and fearful when others are greedy. That philosophy is especially relevant when considering the Melbourne property market predictions for 2026, as the city begins to move back into favour with savvy investors.

I recently completed a major report titled “Australian Property Market Outlook 2026-2031: The Great Supply Crunch Coming.” Its foundation was the collation and analysis of a range of data, coupled with one-on-one discussions and general observation by some very smart Australian real estate experts.

One of the big findings from this work is that in 2026, Melbourne will be well established on a path back to the upper echelons of Australia’s property markets in terms of prices and sales activity. This year is shaping up as one when Melbourne's fundamentals start working in the city's favour again. And if you understand what's really driving the market, you'll be well positioned to capitalise on its rebound.

Supply tightens

Victoria's population is projected to exceed 7 million in the next few years, and, unsurprisingly, Melbourne will likely absorb the lion's share of that growth.

Overseas migration added over 93,000 people to Victoria by mid-2025, and that trend looks set to continue. These are young professionals, international students, skilled migrants - people looking for rental accommodation first, then eventually looking to buy.

Here's the critical part: Australia is on track to fall short of its national housing target by 426,000 homes by 2029, and Victoria is facing a significant portion of that deficit. It's the same supply story that's driving Sydney, but it's just beginning to really flex its muscles in Melbourne.

This means the tight rental market we've seen in Melbourne, exemplified by vacancy rates hovering around one percent, isn't going away any time soon. In fact, it's likely to tighten further. This flows into increased investor demand for exceptional rental returns. In addition, tenants seeking to exit the tough rental market will only bolster the ranks of owner-occupier buyers. The end result is further upward pressure on prices.

In fact, the numbers are compelling. In our report, I forecast Melbourne house prices to reach $1.402 million by 2030. That's 29 percent growth from 2025 levels. I expect unit prices will climb to $804,000, reflecting a 26 percent increase. All dwellings combined will average $1.103 million by the end of the decade.

The median house price in Melbourne was surpassed by Brisbane in 2023. This is exactly the kind of leading metric that savvy investors pay attention to. History shows that when

Melbourne and Brisbane compete for the highest median; Melbourne will eventually reassert itself toward the long-term norm of being in the dominant position.

Shifting investor sentiment

One of the elements that proved most impactful on Melbourne’s property market in recent years has been Victoria's tax settings and tenancy legislation, which made real estate ownership less attractive. Tax was a major bugbear among the property investor community. They saw themselves targeted as a path to repaying the state’s COVID debt. At the same time, tenancy legislation was increasingly redrafted in the tenant’s favour and to the landlord's detriment. As such, investors fled the market in droves, further reducing rental property supply and thus tightening vacancy rates.

But some investors are now looking past these legislated changes. They’re beginning to find value despite government intervention.

Recent ABS data shows investor lending is growing faster than owner-occupier lending. That's a significant signal that smart money is moving back into Melbourne.

In short, the city's long-term fundamentals are too strong to ignore. You've got impressive future population growth, a severe housing shortage, a tight rental market, and prices that are more affordable than Sydney’s.

Mix that together, and you get compelling investment logic for buyers.

Momentum across Melbourne

Inner Melbourne is likely to be one of the earliest beneficiaries of renewed buyer confidence. Core city areas, including established inner suburbs close to employment, education and lifestyle hubs, are already seeing tightening supply of quality stock. As migration continues and international students and professionals return in greater numbers, demand for well-located apartments and period homes is expected to strengthen. Price growth here is unlikely to be explosive, but it should be steady and resilient, supported by scarcity, walkability, and the long-term appeal of proximity to the CBD.

In the inner east and northeast, suburbs such as Box Hill and Ringwood are emerging as standout performers. These areas combine strong transport links, major activity centres, hospital and education precincts, and ongoing urban renewal. They appeal to a broad buyer pool, including owner-occupiers, downsizers, and investors, which tends to underpin liquidity and price growth. Further west, the inner west and western growth areas, including Footscray, Sunshine and Werribee, are benefiting from infrastructure investment and improving amenity. These suburbs tend to respond quickly when affordability becomes a constraint elsewhere, and as confidence lifts, they are well placed to deliver above-average growth from a more affordable base.

The southeast and southern corridors, including Dandenong, Cranbourne and Pakenham, are likely to remain volume-driven markets, underpinned by population growth, housing demand and relative affordability. While price growth here is typically more cyclical, easing lending conditions and sustained demand from first home buyers and upgraders should support solid gains through 2026.

In the northwest and north, areas such as Hume, Darebin, including Thornbury and Preston, and Merri-bek, including Brunswick, continue to benefit from gentrification, strong rental

demand and proximity to the city. These markets often sit at the intersection of lifestyle and affordability, and as buyer sentiment improves, they are well-positioned for consistent growth rather than short-term spikes.

2026 looks crucial

For Melbourne's property market, 2026 looks like a year where patience will deliver long-term rewards.

While other capitals have had their moments over the last few years, Melbourne's foundations for gains have been quietly building, and the fundamentals are rock-solid.

If you're thinking about Melbourne real estate—whether for your own home or as an investment—2026 is worth serious consideration. The opportunities are there for those willing to look beyond the headlines and understand what's really happening in the market.

Of course, a market like this doesn't reward everyone who rushes in. Smart, strategic investors—those willing to work with experienced, well-connected independent experts to understand the local market and pick quality assets in the right locations—can position themselves well.

If you are keen to be part of Melbourne’s promising 2026 story, reach out to our Propertybuyer team. We can help turn your dreams of Melbourne’s cosmopolitan lifestyle and property investment success into a reality.

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call us on 1300 655 615 today.