Melbourne has lost its status as a $1m city less than a year after it clawed its way back to the housing market title and experts warn it will fall further.
The latest Home Price Index from realestate.com.au’s research arm, PropTrack, shows the city’s typical house value hit $995,000 in May, a $10,000 reduction compared to $1.005m in April.
The last time Melbourne’s median house price was recorded below seven figures was at $993,000 in July 2025.
Adelaide, Perth, Sydney and Brisbane all retained $1m-plus median house prices.
Experts are forecasting Victoria’s capital could see a further short-term decline amid concerns about the Federal government’s coming changes to negative gearing and capital gains tax (CGT), as outlined in the budget earlier this month.
PropTrack senior economist Angus Moore said Melbourne’s market conditions had been “fairly sluggish” since the Reserve Bank started raising rates in 2022.
He also attributed Melbourne’s underperformance to having more housing stock for sale in recent years, plus lower interstate migration than South Australia, Western Australia and Queensland.
“That’s probably, at the margin, made any given home a little bit less competitive and slowed prices though that’s a secondary effect relative to interest rates,” Mr Moore said.
In May, Melbourne’s median unit value grew 0.1 per cent to $625,000.
Regional Victoria posted a 0.2 per cent monthly rise to its $640,000 median house price while units remained steady at a $443,000 median.
While on the surface declines would appear to be good news for affordability-conscious firsthome buyers, Property Investment Professionals of Australia chair Cate Bakos said Melbourne properties priced in the $400,000 to $950,000 range had been showing more resilience due to the federal government’s expanded 5 per cent Deposit Scheme.
“I think in the short-term we’ll see a little bit more of a decline in our values, I’m not expecting it to be dramatic, but I think we’ll see a few more losses before we see gains,” she said.
Jellis Craig chief executive Andrew McCann described Melbourne’s sub-$1m typical house value as a “double-edged sword” due to improved affordability for buyers, but also a reflection of softer confidence in the wider property market and economy.
Mr McCann said he believed Melbourne’s current sub-par housing market performance would be a “short dip” with confidence likely to return the market in early- to mid-2027.
