Melbourne housing market outlook

Where prices are

These are the official ABS medians for established houses in Greater Melbourne: actual sale prices, published quarterly. They lag the monthly private indices by a few months, but they are the public record the model is built on.

Expensive, or about to correct?

People blur two different questions together. We answer them separately.

On affordability — price versus what a typical household can borrow, compared with Melbourne's own 2002–2019 norm — Melbourne is the least stretched of the five capitals. Every capital is expensive on this measure; the question is who is most exposed.

On the second test — price versus what it costs to build a comparable home, adjusted for population growth — Melbourne has already cooled to around what it costs to build, so much of the air has come out.

What would hurt most

In our combined-downturn scenario (rates up, migration stalls, wages soften) Melbourne is 4th most exposed of the five capitals. As elsewhere, interest rates are the biggest single lever — a further rise hurts more than a migration slowdown.

The backdrop is the same for every city: the cash rate is on hold at 4.35%, the 10-year bond is near a 15-year high and core inflation is stuck around 3.6%, so the market has swung from expecting rate cuts to pricing higher-for-longer. Conditions are neutral / transitional on our macro read.

Why trust the read?

We calibrated the model on 2011–2019 data only, so it never saw the 2020s. It still flagged the 2021 boom as over-valued and the 2023 rate-shock correction as back to fair. It also named Adelaide and Brisbane as the most stretched capitals before the 2026 downturn reached them. How the model works →