The long period of subdued growth across Melbourne appears to be transitioning into a renewed upswing as we move into 2026.

After years where values were either flat or gently declining, recent indicators show prices stabilising and starting to rise again. According to Cotality (former CoreLogic) data, dwelling values across Melbourne climbed modestly through late 2025, with house prices and unit values both showing quarterly gains as demand returned to the market.

Cotality’s Home Value Index confirmed a broader recovery across Australian property markets in 2025, although both Sydney and Melbourne experienced a small dip in values in December before renewed momentum emerged.  This softening doesn’t signal decline, but rather highlights that the market is finding its footing before a more sustained recovery.

Several major forecasts now point toward positive growth in 2026. KPMG’s research suggests Melbourne could outperform most capitals with house prices rising by around 6 to 6.6 per cent next year, potentially pushing median values back toward the million-dollar mark.  Other analysts forecast similar outcomes, with moderate growth expected for both houses and units as buyer confidence improves. 

Affordability and Buyer Demand

Improving sentiment has been a consistent theme in market commentary. Buyers are returning, particularly for affordable stock, which has been the main driver behind recent gains. Lower-priced properties and housing closer to the middle ring are attracting activity ahead of the rest of the market, supported by tighter supply and strong interest from both first home buyers and investors.

The rental market, while not as strong as other capitals, remains tight with vacancy rates low and yields holding up. This continues to support investor interest in Melbourne properties even if rent growth is more moderate than in some other cities.

Suburbs, Units and Emerging Sectors

Victoria’s unit market is tipped for stronger performance into 2026, with attached dwellings forecast to outpace houses in price growth. Demand for more affordable living options and lifestyle-oriented residences is helping drive this shift.

Within Melbourne, buyers and investors are increasingly focusing on growth corridors and middle ring suburbs, including areas that offer relative value compared to the inner city. These pockets often provide a balance of affordability, infrastructure upgrades and population growth – all key fundamentals for long-term price growth.

Geelong and Regional Victoria Outlook

City fringe and regional markets are also on the rise. Geelong, in particular, is gaining attention as one of Victoria’s top investment prospects for 2026, buoyed by affordability, infrastructure improvements such as fast rail, and strong local economic growth. Analysts have named suburbs around Geelong as national hotspots, recognising renewed buyer interest after years of underperformance.

Regional Victoria more broadly has shown solid performance, with dwelling values growing through 2025 at a rate that outpaced combined capital cities. While its growth is more moderate compared to some other regions, strong migration, lifestyle appeal and improved connectivity continue to underpin demand outside Melbourne.

Looking Forward

Overall, the Melbourne market is widely expected to enter a steady growth phase in 2026, supported by lower interest rates, improving sentiment, and tight supply. Buyers who are well-positioned and focused on fundamentals such as location, infrastructure and demand drivers should find opportunities to build equity over the medium to long term.

If you’re planning to explore the Melbourne market or nearby regions like Geelong and want tailored insights on where demand is strongest and which types of properties are likely to perform best, PB Property can help.

Get in touch and we’ll guide you through the data and support your next property decision with confidence.