We’re being asked this more often in client conversations lately.
Not “is Melbourne a good market?” That one’s been debated for years. This is more specific. If you’re going to buy somewhere in Australia right now, is the Melbourne property market actually the best value on offer?
It’s a fair question, and one we spend a lot of time on with our clients. The numbers behind it are more interesting than most buyers realise, so let’s walk through what we’re seeing.
The Gap That Keeps Widening
For most of the past decade, Melbourne and Sydney sat relatively close together on median house prices. Sydney commanded a premium, as it always has, but Melbourne wasn’t far behind.
That relationship has shifted significantly. It’s one of the first things we point out to clients weighing up where to buy. According to Cotality (formerly CoreLogic), the median house price in Melbourne sits around $958,000 as of June 2026. In Sydney, it’s closer to $1,600,000. That’s a gap of more than $600,000. Melbourne houses are now approximately 41 percent cheaper than their Sydney equivalents, the widest discount in roughly 20 years.
This isn’t a small deviation from the norm. It’s a historically unusual divergence, and one that tends not to last.
Why We Think Melbourne Has Been Lagging
We won’t pretend the underperformance happened by accident. State-level tax changes have increased holding costs for investors. Reduced land tax thresholds and new levies didn’t exist five years ago. Combined with some of the country’s most restrictive tenancy laws, we’ve watched many landlords exit the Victorian market altogether. There’s also been a broader confidence issue. Victoria’s economic recovery post-COVID has moved slower than some other states.
The result has been a market that’s largely gone sideways while Perth, Brisbane and Adelaide ran hard.
But here’s what we think gets overlooked. None of these are permanent structural problems. They’re cyclical and policy-driven. They’re the kind of headwinds that shift over time, not fundamental flaws in the city itself. We saw this play out three years ago, when Brisbane and Perth were in a similar position: affordable, cautious, and easy to overlook. The clients who bought in anyway, because the fundamentals made sense rather than because of hype, have since seen significant growth.
Melbourne shows the same structural conditions today. Population growth is strong (ABS net overseas migration data). New housing completions sit at a 10-year low in Victoria (Victorian Government building approvals data). Rental vacancy sits around 1.5 percent (SQM Research). Together, these tell us the same conditions that preceded Brisbane and Perth’s recovery are in play now.
What the Forecasts Are Telling Us
ANZ Research recently revised its property forecasts in its latest Australian Housing Market Outlook, and it’s a picture we’re watching closely for our clients.
For 2026, we expect Melbourne to see modest price softness, roughly a 1.7 percent decline. The RBA’s rate decisions and a dip in consumer confidence are driving this. But for 2027, forecasters have named Melbourne as one of only two capital cities, alongside Sydney, where price growth will likely accelerate. Meanwhile, Perth, Brisbane and Adelaide will all likely slow meaningfully.
The cycle appears to be turning. We think the Melbourne property market stands to benefit from that turn more than most.
Forecasts alone aren’t a strategy, though. This is where we spend most of our time with clients. A positive outlook for Melbourne doesn’t automatically mean every Melbourne property is a good buy. The real question isn’t whether the city grows. It’s whether your specific property stands to benefit from that growth. That’s where clarity and selectivity matter more than the forecast itself.
The Flight to Quality We’re Seeing on the Ground
Melbourne isn’t uniform right now, and this is something we see week to week. Well-located, well-presented properties in established suburbs are holding their value and still attracting genuine competition. Properties that are harder to renovate, in less connected locations, or that need significant work are sitting longer.
This matters because it means the market is rewarding selectivity, not speed. Buyers often assume that in an undervalued market, almost any purchase will work out over time. In our experience, the opposite is usually true. When markets are softer, quality separates itself more clearly. Properties with strong owner-occupier appeal, transport access and proven long-term demand keep attracting competition. Everything else stalls.
This is exactly why our process focuses so heavily on filtering before buying. Finding a property is rarely the hard part. Identifying which properties support a client’s long-term goals is where the real work happens. The buyers we work with who stay patient and clear on what “good” looks like find they can access quality stock with less pressure than they’d face in a fully heated market.
Our Bottom Line
We won’t pretend Melbourne’s recovery is guaranteed on any particular timeline. Not all suburbs are equally positioned. Some areas that look affordable on paper carry genuine long-term risks. The opportunity here isn’t “buy anything in Melbourne before it’s too late.” Honestly, that mindset is often where costly mistakes begin.
But the Sydney-Melbourne gap sits at a 20-year extreme. Population is growing faster in Victoria than almost anywhere else in the country. New housing supply sits at its lowest point in a decade. For buyers with clear goals, a long-term horizon and the right guidance on where and what to buy, we think the Melbourne property market currently offers a combination of relative value and structural upside that’s genuinely rare.
Thinking About Buying in Melbourne?
Understanding the Melbourne property market is one thing. Knowing which properties within it are worth pursuing is another. That’s where a safe pair of hands and strategic advocacy make the difference.
