Melbourne’s median house price has sunk below $1m for the first time since 2025, PropTrack figures show.
Melbourne has lost its status as a $1m city less than a year after it clawed its way back to the housing market title and experts are warning it will fall further.
The latest Home Price Index from realestate.com.au’s research arm, PropTrack, shows the city’s typical house value hit $995,000 in May, a $10,000 reduction compared to $1.005m in April.
The last time Melbourne’s median house price was recorded below seven figures was at $993,000 in July 2025.
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Adelaide, Perth, Sydney and Brisbane all retained $1m-plus median house prices.
Experts are forecasting Victoria’s capital could see a further short-term decline amid concerns about the Australian government’s upcoming changes to negative gearing and capital gains tax (CGT), as outlined in 2026 national budget released earlier this month.
PropTrack senior economist Angus Moore said Melbourne’s market conditions had been “fairly sluggish” since the Reserve Bank started raising rates in 2022.
He also attributed Melbourne’s underperformance to having more housing stock for sale in recent years, plus lower interstate migration than South Australia, Western Australia and Queensland.
“That’s probably, at the margin, made any given home a little bit less competitive and slowed prices – though that’s a secondary effect relative to interest rates,” Mr Moore said.
PropTrack senior economist Angus Moore says that Melbourne is relatively affordable compared to many other parts of the country.
The PropTrack Home Price Index stated that home prices in Sydney and Melbourne have fallen slightly in May, for the third consecutive month. Picture: NCA NewsWire/David Crosling.
In May, Melbourne’s median unit value grew 0.1 per cent to $625,000.
Regional Victoria posted a 0.2 per cent monthly rise to its $640,000 median house price while unites remained steady at a $443,000 median.
While on the surface declines would appear to be good news for affordability-conscious first-home buyers, Property Investment Professionals of Australia chair Cate Bakos said Melbourne properties priced in the $400,000 to $950,000 range had been showing more resilience due to the federal government’s expanded 5 per cent Deposit Scheme.
“I think in the short-term we’ll see a little bit more of a decline in our values, I’m not expecting it to be dramatic, but I think we’ll see that a few more losses before we see gains,” Ms Bakos said.
She added that investors wanting to sell in order to get the 50 per cent CGT discount could also potentially “flood the market” in the next 13 months.
Property Investment Professionals of Australia chair Cate Bakos says homes priced at $950,000 and below are continuing to sell well across Melbourne.
Price growth in Brisbane, Perth and Adelaide has also slowed, after an extremely strong 2025.
Jellis Craig chief executive Andrew McCann described Melbourne’s sub-$1m typical house value as a “double-edged sword” due to improved affordability for buyers, but also a reflection of softer confidence in the wider property market and economy.
Mr McCann said he believed Melbourne’s current sub-par housing market performance would be a “short dip” with confidence likely to return the market in early- to mid-2027.
While his agency is seeing interstate-based investors looking to Victoria for long-term capital growth, the Anthony Albanese-led government’s 2026 budget had “put a complete stop on the way that people are approaching property investment until they form their own view or take further advice”.
“So that that’s certainly slowed the market dramatically,” Mr McCann said.
Jellis Craig chief executive Andrew McCann says units and small homes in inner Melbourne suburbs, like Brunswick and Richmond, have been the more resilient segments of the market.
The HPI report described national home prices as “essentially flat” in May.
Ray White Victoria chief auctioneer Luke Banitsiotis the Melbourne market never felt the boom-like conditions that Brisbane, Sydney and Adelaide experienced, in recent times.
“Throughout 2025 the (Melbourne) market was gradually improving, with conditions favourable for selling without being a runaway market,” Mr Banitsiotis said.
He said Melbourne’s lower median house value aligned with recent budget decisions and rising interest costs through the first half of the year.
“Buyers are still transacting in the current market, they are just engaging at a slightly lower price point,” Mr Banitsiotis stated.
Ray White Victoria’s Luke Banitsiotis in action at an auction.
Real Estate Institute of Victoria chief executive Toby Balazs said Melbourne’s new $995,000 median house price was concerning from the perspective of broader market confidence.
“In terms of the overall valuation of Victorian property, the total reduction is not a large number,” he said.
“But it’s a reminder for governments to ensure that the environment exists in terms of attracting investment and inspiring confidence such that the property market continues to grow, we certainly don’t want to be in decline.”
REIV chief executive Toby Balazs has encouraged the government to support policies which instil confidence in the property market.
Under the budget changes, from July 1, 2027, negative gearing will be limited to the income investors are drawing from rental properties, while capital gains tax for investments owned longer than one year will lose their current 50 per cent tax cut in favour of an indexed system expected to send more money to government coffers.
Both changes will come with a handful of exceptions, including for new builds.
Additional reporting by Sophie Foster
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