“Melbourne offers relative affordability compared to Sydney and numerous government entry schemes, making 2026 a rewarding time for prepared buyers.”
The Melbourne property market is genuinely different from its interstate peers in 2026. After a prolonged period of underperformance relative to Sydney, Brisbane, and Adelaide, Melbourne is now showing early signs of recovery — and the conditions that contributed to underperformance are easing. Property prices may rise or fall depending on market conditions.
The affordability case for Melbourne
Melbourne’s median house price sits approximately $63,000 below Brisbane’s and around $350,000 below Sydney’s — a historically unusual discount for Australia’s second-largest city. For first home buyers who have flexibility on location, Melbourne’s relative value is compelling on fundamentals. Whether this gap closes is uncertain, and market conditions may change.
What rising rates mean for timing
Three RBA rate rises in 2026 have reduced borrowing capacity across all cities. In Melbourne specifically, the risk of overpaying at the top of a cycle is reduced because Melbourne hasn’t run as hard as other markets. The trade-off is that repayments at current rates are materially higher than 18 months ago.
The government support stack available in Victoria
First home buyers in Victoria can access the First Home Guarantee (5% deposit, no LMI), the Help to Buy scheme (2% deposit, government equity contribution), the Victorian Homebuyer Fund, and potentially the First Home Owner Grant on new builds. The combination of available entry schemes in 2026 is broader than at any previous point in the market cycle.
The honest trade-off
Buying in Melbourne right now means buying at current repayment levels with a serviceability buffer already applied. If rates rise further, repayments increase. If rates stabilise or fall in 2027 as some forecasters predict, the repayment burden eases over time. Neither outcome is guaranteed. The decision is ultimately whether your financial position allows you to comfortably service the loan through further potential rate rises.
→ You may wish to speak with a licensed mortgage broker to assess your personal circumstances. This is general information only. Individual circumstances vary and scheme details change regularly. Verify current eligibility, caps, and terms with official sources before making decisions. Speak with a licensed mortgage broker for advice tailored to your situation. All loans are subject to lender approval.
Sources: KPMG, Australian Property Market Forecasts 2026; InvestorKit, Melbourne Property Market 2026 Guide; Housing Australia, First Home Guarantee 2025–26; RBA Cash Rate Target, May 2026.
