Insights

Solid Demand in Affordable Brackets

The sub-$1 million segment remains particularly active. First-home buyers are driving demand, especially in Melbourne’s outer and growth corridor suburbs where house prices still offer good value. Areas like Wallan, Tarneit and Greater Frankston continue to see strong interest, with house prices sitting well below the metro median. In fact, many homes are transacting around the $650K–$800K mark, with units still averaging under $620K—making them attractive for both buyers and investors alike.

Investor Confidence Growing, But Still Cautious

There has been a modest return of investor activity, with investor lending rising around 26% year-on-year. However, enthusiasm is tempered by concerns over recent state government measures—including increased land taxes, vacant property levies, and changes to stamp duty rules. These policies are causing some hesitation, particularly among landlords and new entrants to the market.

That said, experienced investors are beginning to see opportunity in current conditions. With tighter stock levels, softening interest rate expectations, and improving rental yields, the fundamentals are starting to re-align. Many see this as a counter-cyclical moment worth considering—especially in well-located suburbs with long-term growth potential.

Prices Ticking Up Again

Melbourne dwelling values rose +0.3% in June, according to CoreLogic’s Home Value Index, marking four consecutive months of growth. While Melbourne’s annual growth trails other capital cities, the recent uptick is encouraging. Key drivers include limited supply, low listing volumes, and a build-up of pent-up buyer demand. Unit values still sit below their 2021 peak, presenting potential buying opportunities.

Policy Weighs on Sentiment

Policy continues to play a key role in shaping market sentiment. The Victorian Government’s increased land tax thresholds, stamp duty reforms, and housing targets are creating uncertainty among property owners and investors. As these changes continue to roll out, many are adopting a more conservative approach while waiting to see their full impact.

Looking Ahead

There is a growing belief that we may see the Reserve Bank cut interest rates later this year or early in 2026. If this occurs, it could stimulate further buyer activity, particularly among upgraders and investors sitting on the sidelines.

In the meantime, the market remains patchy but positive. Demand is being driven from the ground up—first-home buyers, strategic investors, and families seeking value are underpinning activity, especially in suburbs under the $1 million threshold.

Final Thoughts

It’s encouraging to see sustained interest across key buyer segments, despite seasonal factors and policy headwinds. Whether you’re looking to buy, sell, or invest, understanding local market dynamics and aligning with trusted professionals is more important than ever.