Buyer confidence is rising across Melbourne, with new data and real-world insights showing competition is increasing as demand returns faster than supply. Photo: Getty Images
Melbourne buyers who have waited through years of uncertainty are being forced to return to the market as competition increases and confidence rebounds faster than expected.
After sitting on the sidelines through interest rate shocks, land tax debates and gloomy sentiments, buyers across the city are discovering that the window they had been waiting for is closing and the market has shifted beneath them.
New data from property services firm Oliver Hume shows Melbourne is now best positioned to lead the capital’s land markets higher in 2026, after several years of flat prices put the city in a good position for recovery.
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Madeleine Roberts, director of MR Advocacy, said competition was building back up in pockets that had been quiet for years.
“Buyers are definitely back,” Ms Roberts said.
“On the ground it is mainly a bull’s eye.”
Data from Oliver Hume shows the gross average lot price in Melbourne rose 2.1 per cent to $407,000 in the September quarter, up from $398,500 in the June quarter.
Madeleine Roberts, director of MR Advocacy, says buyers are coming back “in guns blazing” after years of caution, with competition increasing in several Melbourne suburbs.
Melbourne’s housing market is showing the first signs of a turnaround as buyers re-enter after several subdued years marked by flat prices and uncertainty. Photo: Jake Nowakowski
Nominal prices remained stable at the same level as in September 2024.
The average price is now well behind South East Queensland at $483,600, with Adelaide closing the gap at $349,900, according to Oliver Hume.
Ms Roberts said a shift in sentiment had played as big a role as a rate cut.
“Twelve months ago, interstate investors and even local investors wouldn’t touch Victoria,” she said.
“There was real wariness around land tax changes and rent reforms.
Frankston is emerging as one of the forerunners in Melbourne’s recovery, with buyers facing increasing competition after prices rose sharply over the past year.
Melbourne’s eastern suburbs are tightening, with buyer demand picking up well before broader price growth shows. Photo: Wayne Taylor
“Over the past six months, buyers have realized that these taxes are not nearly as scary as initially feared. Combined with interest rate cuts, this has meant that first home buyers have returned, people have been able to upgrade and interstate investors have been attracted back to Victoria.”
The MR Advocacy director said buyers who put off decisions between 2022 and 2024 are now faced with a market moving faster than their savings.
“I don’t see panic, but I see action,” Ms Roberts said.
“The biggest risk is that the market will exceed your savings capacity.”
She said momentum was evident early in traditional investment hotspots in Melbourne’s south-east and north, with competition also heating up in parts of the east.
“In Frankston, for example, properties we bought last year for around $600,000 are now closer to $800,000,” Ms Roberts said. “That’s a huge jump in just twelve months.”
Selling agents said the shift was also visible in auction crowds and bidding depth.
Buxton Ashburton director and auctioneer Tai Menahem says competition at auctions has increased significantly as upgraders re-enter the market.
Buxton Ashburton director and auctioneer Tai Menahem said the spring had been significantly stronger than in recent years.
“This has been much more competitive – by a mile – than anything we’ve seen in the last two to three years,” Mr Menahem said.
“Buyers are finally seeing light at the end of the tunnel after a number of interest rate cuts.
“There is a growing belief that the worst is behind us and now is the time to buy.”
Mr Menahem said upgraders were driving much of the urgency, having delayed moves through the tougher cycle.
“A lot of these buyers have held back for two or three years and now they just need to upgrade,” he said.
“They fight tooth and nail to secure a property.”
Oliver Hume chief executive Julian Coppini says Melbourne is well positioned for the next phase of growth, after years of underperformance compared to other capital cities.
Oliver Hume chief executive Julian Coppini said the city’s relative affordability was pulling buyers back as other markets cooled from previous peaks.
“We are particularly optimistic about Melbourne, where we expect continued improvement in both prices and transaction volumes,” Coppini said.
“Volumes have already started to increase and Melbourne now offers the best relative affordability of the east coast capitals.”
While interest rates remain a risk, analysts say the combination of returning confidence, population growth and continued supply constraints poses a risk. This means that conditions could tighten quickly once buyers re-enter at the same time.
For those still waiting on the sidelines, the warning signs are already there.
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