Discounts shrink to lowest since 2021 as market recovers
Owen said the data suggested Melbourne would continue to have an “affordability advantage” into 2026, while other markets “may stall as cash rates remain stable”.
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Owen added that Melbourne’s market, which is 1.5 per cent lower than record levels with the median house value at $819,000 (down nearly $12,000 from the peak) according to Cotality data, is poised to be quite resilient in a market that could be challenging in other cities in 2026.
Melbourne expected to reach new heights in 2026, according to Domain Forecast Report 2026It predicts that average home prices will increase by 6 percent to $1,170,168.
The figures come after the Victorian government this week proposed legislation that would allow estate agents to publish a seller’s reserve price at least seven days before auction day or a fixed-date sale.
Real Estate Bureau real estate attorney Kristy Caskey says lower interest rates and Australian Government 5% Deposit Scheme It made it easier for people to borrow “an amount you couldn’t get a year ago.”
“It’s a lot harder to buy now; buyers are more aggressive and want to sell even before the auction,” he said. Quality stock, especially a single-family home under $1 million, was particularly sought after.
“Nice properties make dollars,” Caskey said, adding that interstate investors, particularly from Sydney, were also looking to enter the Melbourne market and cash in on its relative affordability.
Nerida Conisbee, Ray White’s chief economist, agreed that increased buyer activity makes it easier for sellers to get the price they want.
“Melbourne is strengthening… we’re finally seeing some pretty good price growth, which has a lot to do with the fact that we’ve had three rate cuts, and Melbourne looks relatively affordable to the rest of the country,” he said.
The increase in buyers is also encouraging people to put their homes on the market. “Melbourne is quite different to the rest of the country in that we are seeing an increase in the number of properties for sale,” Conisbee said.
Cool, unique properties like converted warehouses sell faster than homes that need more work. Credit: Specialization
But Joseph Luppino, principal at Village Real Estate in Melbourne’s inner west, believes the lower discount rate is a reflection of sellers matching their expectations to a very different market than four years ago.
“November 2021 was the tipping point of the market where Melbourne went from a COVID boom to seeing prices plummet,” he said.
He said thirteen consecutive interest rate hikes since May 2022, combined with the cost of living crisis, had forced sellers to make discounts as buyers struggled to find financing for the property.
“We started out with people buying properties that were only seen in a video [during COVID] “To buyers looking to buy today,” Luppino said, “our pool of buyers… are selective about what they buy; they only buy if they love the property, they don’t compromise.”
Like Caskey, Luppino said “cool” properties like converted warehouses are turning gangsters, while turnkey homes in need of work are languishing on the market.
“Owning property is expensive today; it wasn’t this expensive five years ago,” Luppino said.
