Melbourne dwelling values have experienced zero growth over the past five years and have declined significantly this calendar year.
This lack of growth relative to the rest of Australia has meant that Melbourne’s median house price is now tracking at historical cyclical lows compared with the other capital cities.
This price discrepancy has made Melbourne housing relatively good value and affordable.
Although Melbourne home values continue to fall, with no immediate turnaround in sight, there are some green shoots on the horizon.
Melbourne’s auction clearance rates have staged the nation’s strongest rebound, albeit from a low base.
The weekend’s preliminary clearance rate of 60.8% broke the 60% mark for the first time since the week ending May 24th 2026.
Melbourne’s gross rental yield of 4% is also the highest of the major capital cities, making it relatively enticing from an investment perspective.
Source: Cotality
Therefore, from a valuation perspective alone, Melbourne housing appears the most likely to stage a rebound.
The bigger issue at play is that the state election will be held in November, with the highly incompetent and unpopular Labor government very likely to lose office.
Louis Christopher, founder and managing director of SQM Research, noted on X (Twitter) in response to the rising clearance rate that “Melbourne does currently offer some of the highest rental yields I have ever seen for the city” and that “it’s possible some buyers are betting on a change of Government”.
Thus, Melbourne does appear the most primed for a housing rebound, although it likely won’t arrive until next year, after the election.
In the meantime, those looking to purchase in Melbourne can make lowball offers, knowing that values are likely to rebound soon, unlike some of the other major capitals.
