Melbourne has spent the past few years as the quiet achiever of Australian property, underperforming relative to Perth, Brisbane and Adelaide while quietly building the conditions for a meaningful recovery. That recovery now appears to be underway. For investors considering Melbourne property investment in 2026, the question is no longer whether the market is moving, but where the best opportunities are.
At ALIC, we work with Melbourne-based investors and interstate buyers looking to access what many analysts are calling one of the most compelling market setups of any Australian capital city right now.
What the Data Is Saying
KPMG’s latest Residential Property Outlook forecasts Melbourne house prices to rise 6.6% in 2026, and unit prices to climb 7.1%, the strongest projected unit growth of any capital city in the country. CoreLogic data shows Melbourne’s median house price has already risen 4.0% over the past 12 months to approximately $974,000. Units have recovered faster, up 5.6% year-on-year with a median around $637,000.
Supply is tightening meaningfully. ABS data shows dwelling completions across Victoria fell 25.5% in the June 2025 quarter compared to the same period in 2024. REA Group data recorded a 10.4% fall in available listings over the same annual period. Vacancy rates across most Melbourne metropolitan areas sit between 1.1% and 1.4%, well below the threshold that typically indicates oversupply.
Melbourne is also still materially cheaper than Sydney. ANZ economists estimate the city is around 13% undervalued compared to historical price ratios, and with the Metro Tunnel opening in early 2026 and major infrastructure spending continuing across the city’s growth corridors, the long-term growth case is genuinely well-supported.
For current suburb-level data, Domain’s research hub is a strong starting point: Domain Research.
Suburbs Worth Watching in 2026
Frankston and the Bayside South Corridor
Frankston consistently ranks among Melbourne’s strongest markets, with quarterly sales volumes rising for 18 consecutive months. Relative affordability, strong commuter rail access and improving local amenity are driving sustained demand from both owner-occupiers and investors. Entry prices remain accessible and rental yields are competitive.
Coburg and the Inner North
Coburg offers a rare combination of inner-north convenience and genuine value for an established suburb. Unit prices have grown 10.8% annually over the past year and gross yields sit around 5.1%, among the highest in Melbourne’s inner ring. Vacancy rates here are extremely low, reflecting consistent tenant demand.
Cranbourne and the South-East Growth Corridor
The Casey local government area, encompassing Cranbourne, Berwick and surrounds, is recording sustained sales growth driven by affordability, family demand and proximity to employment corridors. These markets offer accessible entry prices with solid long-term growth supported by infrastructure investment and population inflows.
Point Cook and the Wyndham Corridor
Melbourne’s western corridor remains one of the busiest residential markets in Victoria. Point Cook, Tarneit and Wyndham Vale are classified as consistent or rising markets, with strong rental demand driven by proximity to employment hubs, competitive affordability relative to wages and ongoing residential development.
What Investors Should Watch For
Not every suburb will perform equally. The strongest results will come from areas with genuine transport connectivity, proximity to employment, low vacancy rates and limited oversupply of new stock. Be cautious in suburbs with high concentrations of new apartments where supply is still coming online, as these can experience pricing pressure even in a broadly positive market environment.
Getting the finance right matters just as much as choosing the right suburb. Investment lending has different requirements to owner-occupier lending, and having access to a range of lenders can make a meaningful difference to your rate, structure and long-term flexibility.
Contact ALIC today at alic.com.au to discuss Melbourne investment lending across our panel of 40+ banks and lenders.
