Victorian real estate professionals are adapting to an evolving market landscape as fresh economic data highlights shifting growth corridors across the state, alongside active negotiations between peak industry bodies and state policymakers.
A comprehensive decade-long analysis of 536 national municipalities by Propertyology reveals that high density and rapid population growth have failed to protect property values.
The market data paints a stark picture of Melbourne’s inner-city apartment market; despite a 42 per cent population spike in Melbourne’s inner eight-kilometre ring – adding 54,000 residents, equivalent to a city the size of Noosa – the median value of homes occupied by its 200,000 residents is now 16 per cent lower than a decade ago.
The municipality of the City of Melbourne – where 98 per cent of the 135,000 residential dwellings are apartments – was named the worst-performing real estate market in Australia over the 10 years to mid-2026.
Ten years ago, when home loan interest rates sat at 5.5 per cent, national inflation was at 1 per cent, and the state privatised the Port of Melbourne for a $9.7 billion windfall, the median value of a typical inner-city Melbourne apartment was $560,000.
Today, those median values have fallen to $470,000.
Over the same decade, Greater Melbourne’s overall median house price grew by just 25 per cent. This marked the lowest capital growth performance of all eight Australian capital cities:
- Greater Brisbane: +125%
- Hobart: +120%
- Adelaide: +120%
- Greater Perth: +100%
- Canberra: +80%
- Sydney: +70%
- Darwin: +45%
- Greater Melbourne: +25%
In stark contrast, low-density regional Victorian locations significantly outpaced the capital. Alpine VIC (Bright and Myrtleford) recorded a 146 per cent increase in house values.
Regional centres like Mildura (+120%), Wodonga (+110%), Ararat (+100%), Bendigo (+90%), and Bairnsdale (+90%) all more than tripled Greater Melbourne’s decade growth rate.
Propertyology Head of Research Simon Pressley said the national statistical evidence challenges deep-seated beliefs about property performance.
He explained that population mass, plentiful cafes and restaurants, public transport, and affordable entry prices do not form a reliable formula for capital growth.
“The fact that the very worst performed real estate in Australia had all the aforementioned secret-herbs-and-spices is an important reminder that, whilst humans live in property, an overwhelming majority of humans are completely clueless about housing demand and bona fide drivers of property markets.”
Mr Pressley also said that while Greater Melbourne added population at a rate of 18 per cent over the decade – well above the national average of 15.9 per cent – its property performance suffered under a series of state government policy decisions.
The data also found detached houses consistently outperformed high-density apartments because buyers overwhelmingly prioritise adequate living space, storage, and connection to natural lifestyle elements like yards and greenspace over high-rise living.
“1 and 2-bedroom apartments in soleless blocks of concrete score a big fat ‘F’ for failure to meet the core fundamentals of a long-term home.”
Data shows the municipality of the City of Melbourne holds the 8th highest population density in Australia out of 536 councils; it features a median household age of 30 (compared to the national average of 38), 63 per cent of households are couples without children, 25 per cent are married (versus 46 per cent nationally), and 62 per cent were born overseas (versus 33 per cent nationally).
Homeownership in the municipality sits at just 29 per cent, compared to 66 per cent nationally.
Across inner Melbourne, apartment performance lagged across multiple precincts over the decade:
- City of Melbourne: -16%
- Stonnington: -2%
- Port Phillip: +3%
- Maribyrnong: +12%
- Boroondara (Hawthorn): +15%
By comparison, property performance across the rest of Australia highlighted alternative trends:
- National top performers: West Coast TAS led house growth nationwide at +193%, followed by Playford SA (+179%), Noosa QLD (+172%), Break O’Day TAS (+161%), Tweed NSW (+160%), and Tenterfield NSW (+158%).
- Regional shifts: Broken Hill house values jumped 115 per cent despite a 5 per cent population decline. Queensland inland precincts Kilcoy, Gatton, and Gympie saw growth of 150 per cent or more.
- Capital city underperformers: Apartment markets in Parramatta (-5%), Strathfield (+3%), Sydney City (+5%), Burwood (+5%), Ryde (+7%), and Perth City (+7%) sat in the bottom 15 growth rates nationwide alongside Darwin apartments (-11%) and Mount Isa houses (-14%).
Adding to market uncertainty, the REIV is calling for an immediate pause to proposed changes under the Consumer Legislation Amendment Bill 2026 following a contentious Upper House debate.
The industry body expressed frustration after several Opposition amendments designed to make the legislation workable were rejected, warning that key provisions – including a proposed seven-day reserve price disclosure requirement – remain unworkable.
REIV Chief Executive Toby Balazs said questions raised during parliamentary debate highlighted fundamental uncertainty about how the new rules would operate in real-world auction environments.
“Alarmingly, Minister Stitt’s answers were at times inconsistent and contradictory, pausing to consult with advisers for her own clarity. Even simple practical questions on whether a reserve can be changed and under what circumstances were left unclear,” he said.
Mr Balazs warned that forcing real estate professionals and consumers to comply with ambiguous legislation would undermine transparency.
“We cannot expect Victorians to comply with new rules when the policy makers proposing them don’t understand how they will operate. The proposed reform risks adding unnecessary complexity and confusion to the auction process and could ultimately encourage more sellers to opt for private sale, a less transparent form of real estate transaction.”
The peak body has written directly to Minister for Consumer Affairs Tim Richardson, urging the government to delay the bill and enter into further industry consultation.