With a brand new year comes a clean slate, and along with it a fresh and positive outlook on Melbourne’s property investment landscape. From predicted price growth across both houses and units, to strong population increases which is set to have property demand surging, there is plenty to be buoyant about for buyers who want to jump into the investing deep end.
And for investors who have held on over a tough few years post COVID-19? There is definite light at the end of the tunnel.
Melbourne Properties Remain Incredibly Undervalued
Melbourne’s drop down Australia’s capital city median property price ladder has not been very welcome for investors over the last few years. As of December 2025, Melbourne sits 6th behind Sydney, Brisbane, Perth, Adelaide, and Canberra, with a median dwelling price of $827,117.
And while the stagnant capital growth rate has been a thorn in the side of those with current property investments across the city, new investors desiring to enter the market now have a prime time opportunity.
Aside from Melbourne being rich in culture, infrastructure, shopping, schools, and parklands, the median dwelling price in Melbourne is forecast to rise 5%-7% in 2026. This means that right now is the perfect time for new investors to enter the market and take advantage of Melbourne’s lower property prices.
Melbourne is Still One Of The Fastest-Growing Cities in Australia
Melbourne has and still remains one of the fastest-growing cities in Australia, which is sure to reap rewards for property investors in 2026.
According to the Australian Bureau of Statistics (ABS), Melbourne was significantly ahead of other capital cities when it came to population growth. In the year ending June 2024 (the latest key figures), Melbourne grew by 142,637 people, well ahead of Sydney (107,538), Brisbane (72,930), and Perth (72,742). Melbourne is predicted to continue this domestic population growth trend in 2026 (thanks to migration with international students and skilled workers), which is sure to be good news for investors with demand for rentals to continue to increase.
Melbourne’s growth when it comes to infrastructure should also start to bear fruit in the imminent future. The opening of the Metro Tunnel in late 2025 will create more connectivity in the inner city, and hence make these suburbs much more appealing from an investment standpoint. Meanwhile, other projects such as the Suburban Rail Loop and Melbourne Airport Rail (while still both years from completion), will also see significant capital property growth in suburbs close to these projects.
2026’s Investment Hotspots Revealed!
In early January, the Herald Sun revealed Victoria’s 2026 investment hotspots, with a number of Melbourne suburbs making the coveted list.
“There’s been a lot of recent demand from investors for Victoria and it’s a value proposition,” said Cate Bakos in the Herald Sun article, Property Investment Professionals of Australia chair and buyers’ advocate. “But you do need to be picky. A lot of people are looking for a lower priced house in some of the areas for lower socio-economic demographics — and they will have challenges.”
Lalor, which is 18 km north of Melbourne’s CBD, was one of the suburbs which is forecast to experience sensational growth in 2026 after an already stellar 2025. Lalor’s affordability (median house price of $750,000), transport options, and location near the Western Ring Road are what makes it such an appealing area to invest in.
Reservoir in Melbourne’s inner north was another suburb predicted for big things in 2026, with its location 9km to the CBD and broad demographic appeal just a couple of ticks to its name. Elsternwick, Elwood, and Oakleigh were other areas highlighted by the article as suburbs to keep an investment eye on.
Rental Prices Continue their Upward Trajectory
High demand and fewer properties on the market both continue to contribute to the rising rental costs across Melbourne. And whilst this isn’t the best news for those looking to secure a rental home at an affordable price point, it does spell good news for investors.
An article in the Herald Sun in November 2025 forecast that by 2035, renters could be paying almost $40,000 per year for their rental property, almost $10,000 more than they’re paying today. That would mean that a renter paying $580 a week for a house today, would be paying $760 a week a decade on.
In the short term, rents are predicted to rise 1%-3% in Melbourne over the next year, according to SQM Research.
What will 2026 bring for buyers and sellers?
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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