Melbourne crime issues are now a factor being mentioned in relation to its home value growth lagging the nation.
Melbourne house prices are set to rise as much as $59,000 (7 per cent) in 2026, with the city’s west tipped to be the best as first-home buyers drive the city’s next boom.
But a mix of rising crime rates, an economy heavily reliant on government spending and the city doing a better job of building new homes than most other parts of the country, mean the Victorian capital will be outpaced by every other except Sydney, Hobart and Canberra.
The SQM Research Boom and Bust Report by respected property pundit Louis Christopher tips Melbourne for a 4-7 per cent growth spurt in the year ahead, worth about $33,840-$59,200 for its $846,000 median priced home.
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“But it’s definitely one of the underperformers for next year in our view, but it will record price growth,” Mr Christopher said.
The biggest impact on the city would be expectations of a decrease in international migration, the city’s relatively stronger ability to build new homes and the state’s coffers being heavily in the red.
“But resolving crime issues would help in the mid to long term,” Mr Christopher said.
“People should still feel safe, but the crime state are up … and that puts doubt in the minds of investors and even first-home buyers. It creates caution when it comes to spending a lot of money on a home.”
SQM Research director Louis Christopher has tipped Melbourne for some of the more modest home value gains of 2026.
Last year’s report accurately forecast Melbourne’s 5 per cent growth, after it tipped the city for a 2-6 per cent upswing across the past 12 months.
The latest projections anticipate up to two interest rate cuts next year, a steady economy and for inflation to remain within the Reserve Bank’s target band.
If inflation increases and there is no rate cut, the city’s forecast home value growth drops to 2-6 per cent.
But a rise in unemployment and a resulting three or four cuts by the RBA would see the city gain 6-10 per cent in a year — there could also be a 7-11 per cent boom in the unlikely event of unemployment falling and interest rates getting three or four cuts.
Mr Christopher has tipped the city’s affordable west, particularly around the Werribee area, for a 5-8 per cent gain that would be the best in Victoria for the year ahead.
On its current $628,000 median house price, it would add $31,400-$50,240.
A reduction in international migration and Melbourne’s stronger building efforts than other major capitals are key reasons why home values will not grow massively in the new year.
Cranbourne and Pakenham in the south east have also been forecast to outpace the rest of the city with a 5-7 per cent uptick, that could add up to $49,000 to Cranbourne’s $700,000 current typical house price, and $47,950 to Pakenham’s $685,000.
Doncaster and Box Hill are expected to be the city’s best performing unit markets, with the report suggesting a 4-6 per cent rise is on the cards. This would take Doncaster’s typical unit price from $595,000to $630,700 and Box Hill’s from $500,000 to $535,000.
Real Estate Institute of Victoria chief executive Toby Balazs said anything that led to Victoria being seen as a less desirable place carried risks in an era when property investors were increasingly borderless.
Mr Balazs said addressing both crime stats and land tax issues could go a long way to building confidence in the state.
However, he added that it wasn’t surprising to see affordable areas earmarked for growth in the new year, as these would suit both first-home buyers and any investors that did want to put money into Melbourne.
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