2025 was a big year for the Melbourne property market. There were 3 RBA interest rate drops which brought back a wealth of buyer confidence, meanwhile consistent median price growth and plenty of buyer activity were further signs of Melbourne’s real estate bounce back.
What will 2026 bring for buyers and sellers? Many are forecasting a continued upward trend for the market in general, with Melbourne looking to regain its stronghold as one of the most thriving property markets in the country.
Melbourne’s Median Prices To Continue To Rise
Many of Australia’s most trusted real estate experts are predicting median property pricing across all capital cities in Australia will increase anywhere between 6% and 8% this coming year, with Melbourne ready to lead the charge.
Melbourne finished 2025 with a median home price of $827,117, which was a 4.8% increase over the previous 12 months (Dec 24-Dec 25). A strong finish to 2025 saw a wealth of new listings hit the market, with October enjoying the most new listings in a month since November 2021. A high number of auctions also gave the market a buoyant finish to the year.
Data from property services firm Oliver Hume also shows Melbourne is well positioned heading into 2026. “We are particularly optimistic about Melbourne, where we expect to see sustained improvement in both prices and transaction volumes,” said Oliver Hume chief executive Julian Coppini to the Herald Sun. “Volumes have already begun to rise, and Melbourne now offers the best relative affordability of eastern seaboard capital cities.”
The Hot 100 List Is Back Again!
For the fourth year in a row, realestate.com.au has released its ‘Hot 100’ list which highlights possible boom suburbs across Australia for the next 12 months. The ‘Hot 100’ utilises factors such as affordability, amenities, family appeal, location, investment prospects, gentrification, population growth, demographic change, and infrastructure. Victoria featured 22 suburbs on the list, with Melbourne accounting for 14 of the suburbs.
Ringwood East was one of the suburbs nominated by Matthew Scafidi, REBAA Victorian State Representative. Located 25 km east of Melbourne’s CBD, Ringwood East made the list thanks to its family appeal, affordability, infrastructure, and investment prospects. “With major road and rail connectivity, strong schooling options, and amenity including nearby Eastland Shopping Centre, it attracts both home buyers and investors,” said Matthew Scafidi.
Another eastern suburbs gem, Oakleigh, was also nominated for its family appeal and infrastructure. Other notable ‘Hot 100’ suburbs included Port Melbourne, Elsternwick, Brunswick West, Footscray, Cranbourne East, Lilydale, and Williamstown.
AI With Some Bold 2026 Property Predictions!
A recent article in realestate.com.au cast its eye on property predictions for 2026, but in a way you might not expect. Rather than relying on the opinion of property experts and financial pundits, REA decided to go a little left of field and enlist the help of AI in an attempt to forecast the year ahead for the Australian property market.
One of the real points of difference between AI’s prediction and human forecast was in relation to interest rates. While many are expecting rates to stay on hold for much of 2026 (some even seeing a rate increase if inflation cannot be curbed), AI is predicting the Reserve Bank of Australia (RBA) to cut rates multiple times.
“The RBA’s primary mandate is price stability,” suggested AI’s analysis. “Once that is achieved, their gaze will turn to supporting sustainable economic growth and employment. With inflation tamed, the pressure to maintain high rates will dissipate. Furthermore, a global economic landscape in 2026 is expected to encourage central banks to ease monetary policy to stimulate activity.”
AI’s predicted property growth numbers were very close to being in line with human experts, with the AI technology expecting a 5%-7% capital rise across Australia.
Bargains Await In Melbourne’s Inner City
For first home buyers in search of bargains in Melbourne, the inner city represents stellar value. An article by Kaylee Cranley in The Daily Telegraph in December looked at all capital cities across Australia and where buyers could pick up an affordable dwelling. And while Melbourne won’t allow you to snare a bargain for $80,000 like you would if you were looking for a property in outback South Australia (think Coober Pedy), suburbs like Travancore and Carlton in Melbourne’s inner city are places you could start.
The median unit prices for both Travancore and Carlton are $353,700 and $390,000 respectively, and both appeal with incredible locations so close to Melbourne’s bustling CBD. Other affordable unit suburbs include Essendon North, Box Hill, and Hawthorn, while if you’re in search of a home, Pascoe Vale ($1.093m) and Kensington ($1.11m) also offer tremendous value.
With a brand new year comes a clean slate, and along with it a fresh and positive outlook on Melbourne’s property investment landscape.
It’s that time of year again. The days get longer, the streets get twinklier, and inflatable Santas start popping up in yards around Melbourne.
As we close out 2025, it’s clear to me that Melbourne’s property market has not only rebounded but is gearing up for a genuine awakening in 2026.
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