Why 2026 Marks Melbourne’s True Market Awakening

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.

Over the past 12–18 months, we’ve watched confidence steadily rebuild. Prices have lifted, interest rates have eased, and buyers have come back into the market. But what we’re seeing now, particularly in the last half of 2025, feels like the start of a new phase, not just a bounce off the bottom.

At Woodards, we’ve been setting records, selling the most properties we’ve ever sold in a month. Vendors who had been sitting tight are now feeling confident enough to move and buyer competition has been strong. It highlights a Melbourne market that is now firmly shifting into a new period of growth.

The rental market has also remained tight this year, with vacancy sitting about 1.4% according to Cotality. That’s about half what’s considered a balanced level. Bayside suburbs remain the priciest in the state, while areas in the west of Melbourne are more affordable.

Why Melbourne is back in favour
One of Melbourne’s biggest advantages right now is improved relative affordability.

Compared with cities like Sydney and Brisbane, which have surged ahead in recent years, Melbourne once again looks “good value” on a national stage. According to the latest Cotality Home Value Index, Melbourne’s dwelling values rose 0.3% in November 1.6% over the quarter, and 4.6% annually, taking the city’s median dwelling value to $823,495. What stands out to me is how steady and consistent this growth has been.

Melbourne is still below its March 2022 peak, but unlike other capitals that have already surged beyond their previous highs, we still have headroom, and that’s part of our strength. For buyers, this relative affordability provides more accessible entry points; for sellers, it shows a market that is rising with solid, broad-based momentum rather than overheating.

This value story is drawing people back. Victoria has returned to positive net interstate migration, and that’s showing up on the ground: more enquiries from interstate buyers, more relocations for lifestyle or work, and a steady stream of new arrivals choosing Melbourne over pricier capitals.

Layered over that is the impact of expanded first-home buyer support. The First Home Guarantee Scheme, allowing eligible buyers to purchase with a 5% deposit and no lenders mortgage insurance, has removed a major barrier for many. They no longer need to chase a 20% deposit on a moving target. Forecasters estimate these incentives could have an effect equivalent to several rate cuts by boosting purchasing power and accelerating demand.

What the forecasters are saying
Independent forecasts are also lining up behind Melbourne.

KPMG expects Melbourne to be the best-performing capital city in 2026, with house prices rising about 6.6% and units about 7.1%. These are strong numbers by national standards and reflect the view that Melbourne still has significant capacity to grow after a more subdued couple of years.

Domain’s 2026 projections point in the same direction. Their modelling suggests Melbourne’s median house price could rise to around $1.17 million by the end of next year. Units are also expected to rise steadily as more buyers shift their focus towards affordability and urban convenience.

Many suburbs Woodards operates in have already recorded strong results this year. According to Domain data, house prices have climbed 25.9% in Heidelberg year-on-year, while Carlton North is up 21.4%. For units, Blackburn prices have climbed 15.9%, while Mount Waverley has risen 7.4%.

Listings surge as confidence returns
Listings have also risen in the back half of 2025.

PropTrack’s Listings Report shows new listings jumping almost 30% in Melbourne in October compared to September, the biggest monthly rise of any capital city.

It was also the highest volume of new listings Melbourne has seen in a single month since late 2021 and the strongest October on record. This comes despite new listings only climbing 1.8% year-on-year, which shows the back end of 2025 has certainly seen the market gain momentum.

What this means if you’re buying
Improved affordability means Melbourne continues to offer good value compared with some of the faster-moving capitals. Migration has returned, interstate interest is rising, rates have eased from their peak, and first-home buyer support schemes are helping more people enter the market with confidence.

With independent forecasters expecting solid growth of around 6–7% across both houses and units in 2026, it’s a reminder that the market is gradually strengthening. For buyers, it simply underscores the importance of being well-prepared. Having your finances in place, understanding your budget and keeping across local market conditions will help you move confidently when the right property presents itself—whether that’s next month or later in the year.

What this means if you’re selling
For sellers, conditions are the best we’ve seen in several years.

We’re heading into 2026 with rising prices, strong buyer enquiry and a deeper pool of qualified purchasers. New listings have increased, but demand is still outpacing supply in many suburbs, particularly for well-presented family homes and quality units close to transport, schools and amenities.

If you’ve been waiting for “proof” that the market has turned, the data is unmistakable. Melbourne’s revival is behind us – the awakening is already underway. If you’d like to understand what this means for your home or investment, the Woodards team is here to help. Until then, I want to wish you and your loved ones a wonderful Christmas and a relaxing summer break. Here’s to a happy, healthy and hopeful 2026 for us all.