Why Melbourne is Set to Lead the 2026 Property Boom

KPMG’s newest Residential Property Outlook pins Melbourne as the standout performer in 2026.

They expect house prices in Melbourne to climb 6.6%, adding approximately $64,900 to the current median of $983,000—that’s nearly $178 a day.

On the unit front, a 7.1% surge is forecast, boosting the typical unit from $609,000 by over $43,000, and outpacing all capitals except Darwin.

A Snapshot: City-by-City Growth Projections for 2026 (KPMG)

*Based on  PropTrack medians 

Why Melbourne Tops the Table

In my mind there are a few logical reasons explain why Melbourne is poised to outpace others:

1. Affordability Meets Demand
   Detached houses may still feel out-of-reach for many—that’s pushing buyers toward well-located, more affordable family friendly villa units and apartments, spiking demand and elevating growth potential. 

2. Tight Supply, Lagging Approvals
   Housing supply remains constrained. Even as building approvals tick up, completions lag behind - especially taking into account Melbourne's strong population growth. This imbalance fuels price growth.

3. Building Momentum with Rate Cuts
   KPMG’s optimistic numbers tie strongly to anticipated interest rate reductions over the next six months  - increasing borrowing capacity and igniting buyer and investor confidence .

4. Investors Eyeing Melbourne
   Many property investors and buyer advocates and investors are actively repositioning into Melbourne—keen to catch the anticipated rebound. Unfortunately, many interstate buyers' agents don't understand the Melbourne market well enough and are herding their clients into the wrong locations. 

5. Trail of the Rebound
   After being one of the weaker markets post-Covid, Melbourne is now set for a v-shaped recovery, supported by economic fundamentals, migration, and affordable access 

   Domain also believe Melbourne will have strong growth over the next year.

   Domain’s latest Price Forecast Report for FY25-26  reveals that Australia’s property market is expected to see continued price growth over the next 12 months, with major capital cities Melbourne and Sydney driving national trends.

   Dr Nicola Powell, Chief of Research and Economics at Domain expects Melbourne forecast to lead the charge over the next year, as the Melbourne property market typically respond more quickly to interest rate changes.

   Meanwhile, Adelaide and Perth – standout performers over recent years – are expected to experience slower positive growth as affordability constraints intensify.