Key takeaways
Melbourne home values remained flat in February, contributing to a 0.4% decline over the rolling quarter as high interest rates and soft sentiment take a toll.
Market segmentation is evident as lower quartile house values rose 1.0% over the last three months, while upper quartile house values dropped by 1.4%.
A massive 18% increase in fresh listings compared to last year is providing buyers with more choice and leverage, effectively capping upward price pressure across the city.
Following subtle declines through December and January, Melbourne’s housing market remained flat (0.0%) in February.
The sluggish performance has dragged the market 0.4% lower over the rolling quarter, making Melbourne one of the less resilient capital city markets following the February interest rate hike and a noticeable softening in buyer sentiment.
Leading Segment and Growth Drivers
The Melbourne market is currently experiencing a "two-speed" trend, where affordable properties are outperforming the premium sector.
As borrowing power erodes, demand is concentrating at lower price points.
While the overall quarterly trend is negative, the lower quartile of the market has managed to record gains:
| Market Segment | 3-Month Value Change | Quarterly Performance |
|---|---|---|
| Lower Quartile (Houses) | +1.0% | Resilient due to affordability-led demand. |
| Upper Quartile (Houses) | -1.4% | Sharpest decline as serviceability bites. |
| Unit Sector | -0.5% | Values softening across the board. |
Source: Cotality, March 2026
- Also read:Melbourne property market forecast for 2026 | Is it a good time to invest in Melbourne?
- Also read:Latest Property Price Forecasts Revealed. Australian Property Market Outlook 2026: Where To Now After The Rate Rise.
- Also read:Brisbane Property Market Forecast [2026] – What’s Ahead & Where to Invest
- Also read:Sydney property market forecast for 2026. Is it a good time to invest in Sydney?
- Also read:Perth housing market update | March 2026
Surging Supply and Vendor Motivation
Note: A key factor dampening price growth in Melbourne is the significant lift in advertised stock.
Freshly advertised listings have surged as vendors look to sell ahead of a further potential softening in market conditions:
| Listing Metric | Status (February 2026) |
|---|---|
| Freshly Advertised Listings (vs. Last Year) | 18% Higher |
| Freshly Advertised Listings (vs. 5-Year Average) | 12% Above Average |
Source: Cotality, March 2026
Outlook and Downside Risks
The outlook for Melbourne through 2026 remains cautious.
While high employment levels and income security act as stabilizers, the combination of high interest rates and increased regulatory restrictions points toward a period of uneven growth.
Key market headwinds:
- Serviceability Buffers: Higher barriers to credit access are limiting the pool of buyers, particularly at higher value price points.
- Consumer Sentiment: Inflation and cost-of-living pressures continue to soften buyer enthusiasm and confidence.
- Regulatory Settings: Increasingly restrictive macroprudential measures are contributing to more cautious buyer behavior.
Overall, as the flow of new listings is expected to continue lifting toward the Easter break, buyers can expect more leverage at the negotiation table, while sellers will need to remain realistic about their pricing expectations.
