M:
Research
Spring/26 Melbourne Prestige Residential
Headlines Melbourne recorded a higher number of prestige residential sales over the past year, whilst homes are taking less time to sell than one year ago.
The number of residential rental homes in Melbourne is currently undersupplied. Melbourne rental vacancy was recorded at 2.7% at the end of Q2/26.
More Melbourne homes have been newly listed for sale than this time last year. Overall, the total number of homes listed for sale in Melbourne is up on last year.
Prestige residential rents across Melbourne trended 3.5% above last year's weekly rate, with prestige rents forecast to rise 5% at the end of 2026.
Melbourne prestige prices have trended 0.5% lower than a quarter ago, with 2.0% lower annual growth. Price change of -7% is forecast by the end of 2026.
The construction delivery of new homes in Victoria was 9.3% below a year ago, whilst the cost to build in Melbourne escalated 5.0%.
Economy Key drivers
Interest rate
Spring/26
4.35%
Interest rates were last set at 4.35% after the Reserve Bank of Australia (RBA) lifted the cash rate target by 25 bps in May 2026. At this time, most lenders adjusted their mortgage lending rates for homeowners and investors accordingly. By setting borrowing costs, interest rates strongly influence both housing affordability and demand for home loans. Westpac forecasts the cash rate target to be 4.60% by the end of 2026 and 4.10% in 2027, with inflation, energy costs and the global economy being closely monitored as a leading indicators for any possible adjustments during this time.
Stock market return
+2.1%
Economic growth
Australia recorded annual economic growth of 2.1% at the end of Q2/26, following a five year annual average performance of 2.2%. A growing economy fuels the property market by generating employment, lifting household incomes and strengthening overall demand. In general, sustainable annual economic growth is viewed as trending between 2% and 3%. Looking forward, Westpac forecasts economic growth of 1.5% by the end of 2026 and 1.7% in 2027.
+2.8%
Ultra-high-net-worth population growth
The stock market has returned sustainable annual growth. Australia’s stock market performance on the S&P/ASX 200 saw total growth of 2.8% over the past year, although the last quarter recorded growth of 3.5% in Q2/26. Looking back, the five year average return was 4.0%. Historically, strong stock market performance has been a leading indicator for future wealth creation and potential upside for prestige residential property, though current global uncertainty suggests a more cautious stance.
+12.2%
The ultra-high-net-worth (UHNW) population across Australia continues to expand despite the world adjusting to renewed, geopolitical uncertainty and ongoing inflationary pressures. Australia’s ultra-wealthy population grew by 32.5% between 2021 to 2026, to 16,460 people with net wealth of more than US$30 million. This population is forecast to grow by a further 58.5% by the end of 2031 (or an average 12.2% per year) when almost one in every thousand Australians will be considered an UHNW individual. According to the Knight Frank Wealth Sizing Model, Australia is considered to be the fifth fastest forecast during this time.
Economic outlook, Q2/26
2021
2022
2023
2024
2025
2026F
2027F
Interest rate target
0.10%
3.10%
4.35%
4.35%
3.60%
4.60%
4.10%
Economic growth in Australia
4.9%
3.3%
1.3%
1.2%
2.6%
1.5%
1.7%
Business investment in Australia
8.8%
6.2%
8.9%
0.4%
7.0%
4.3%
3.2%
Source: McGrath Research, Knight Frank Research, RBA, ABS, Westpac
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Prestige residential sales Update
Prestige sales
Spring/26
+13%
Rolling tally of annual prestige residential sales Melbourne prestige ($3m+)
Melbourne recorded a higher number of prestige residential sales above $3 million over the past year. Sales trended up 13% with a total of 1,143 transactions in the year ending Q2/26, although outpaced by the five year annual average of 1,340 sales. Sales activity tends to shift with interest rate movements and changes in economic confidence, whilst ongoing global uncertainty continues to influence decisionmaking. Isolating the 325 sales in the Q2/26 quarter, this was 73% above the previous quarter although lower than the 355 five year quarterly average.
Source: McGrath Research
Super-prestige sales
34%
The share of super-prestige sales (above $5 million) was recorded at 34%, compared to the total number of prestige sales (above $3 million) across Melbourne in the year ending Q2/26. This was higher than one year ago when the proportion was 23%, and remains above the 20% share recorded five years ago. Over the past year, Melbourne’s super-prestige sales volume has grown by 68%, whilst rising over the past five years by 119%.
Share of super-prestige sales ($5m+), by number Melbourne prestige Source: McGrath Research
Melbourne prestige, Q2/26
Houses
Apartments
Residential
Number of homes ($3m+) sold in past quarter
299
26
325
Change from a quarter ago
75%
53%
73%
Number of homes ($3m+) sold in past year
1,038
105
1,143
Change from a year ago
11%
35%
13% Source: McGrath Research
3
Prestige residential sales Update
Sales velocity
Spring/26
-6 days
Average days on the market Melbourne prestige
Melbourne prestige homes are taking less time to sell than one year ago. Prestige homes across Melbourne averaged 36 days on market in the year ending Q2/26, from the time they were listed to the day they went under contract. This duration was 38 days a quarter ago (-1 day) and 42 days one year ago (-6 days). A lower number of days on market typically indicates that homes are selling more quickly, often reflecting strong buyer demand and well‑priced, desirable properties. In contrast, a higher number of days on market may signal slower buyer activity. Looking back over the five-year average, it has taken 39 days to sell a home.
Source: McGrath Research
New listings Melbourne
+4.3%
+17.4%
Total listings Melbourne
More Melbourne homes have been newly listed for sale than this time last year. Newly advertised listings in Melbourne were 4.3% higher in the month of June 2026 than the equivalent period last year, according to Cotality. This change in new listings trended above the Australian average of 2.1% and above the 2.0% across Australian capital cities.
Overall, the total number of homes listed for sale in Melbourne is up on last year. Melbourne's total number of listings in the month of June 2026 were 17.4% above the equivalent period last year, according to Cotality. By comparison, the Australian average change for total listings was 8.4% and across Australian capital cities was 15.9%.
Melbourne prestige, Q2/26
Houses
Apartments
Residential
Number of days homes on market
31 days
42 days
36 days
Change from a quarter ago
-1 day
-3 days
-1 day
Change from a year ago
-4 days
-9 days
-6 days Source: McGrath Research
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Prestige residential prices Update
Prestige prices
Spring/26
-2.0%
Tracking prestige prices Melbourne prestige
Melbourne residential property prices have trended lower than a year ago across the prestige market. Melbourne prestige property prices fell by 2.0% in the year ending Q2/26, with a fall of 0.5% recorded in the last quarter. Looking back at price growth since Q2/21, prestige apartments (14.1%) outpaced prestige houses (0.9%) over the five years. In Q2/26, prestige house prices were 1.9% lower and were 6.1% lower on the previous year. In the same quarter, prestige apartment prices rose by 1.1% after rising 3.4% in the past year. Annual residential price growth has averaged 1.4% over the past five years.
Source: McGrath Research
Prestige price outlook
-7%
Forecast for prestige prices Melbourne prestige
Looking ahead, Melbourne residential prestige prices are likely to fall over the coming year. McGrath Research forecasts Melbourne prestige residential prices to contract by 7% by the end of 2026, followed by a 1% compression in 2027. Factors taken into consideration include the projection of a challenged economy and business environment, a solid performing stock market, anticipated pressure on the interest rate target, as sales volume remain lowered.
Source: McGrath Research
Melbourne prestige, Q2/26
Houses
Apartments
Residential
Price change from a quarter ago
-1.9%
1.1%
-0.5%
Price change from a year ago
-6.1%
3.4%
-2.0% Source: McGrath Research
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Prestige residential rents Update
Prestige yield
Spring/26
+20 bps
Gross rental yield Melbourne prestige
Melbourne prestige gross rental yields have trended higher over the past year. Residential gross rental yields rose 2 bps in the Q2/26 quarter to be 3.79% across the Melbourne prestige market, whilst being 20 bps more than a year ago. Gross rental yields are a good initial measure of comparing the return of a property investment before expenses are deducted. A yield greater than 3% tends to be considered most desirable for prestige properties located in capital cities, while below this, tends to indicate high property prices relative to rent, or low rental demand. Gross rental yields have averaged 3.31% over the past five years.
Source: McGrath Research
Vacancy
2.7%
Residential rental vacancy Melbourne
The number of residential rental homes in Melbourne is currently undersupplied. Melbourne rental vacancy was recorded at 2.7% at the end of Q2/26, rising 20 bps in the quarter whilst rising 20 bps over the past year according to REIA. Generally, around 3% vacancy is considered a balanced market between rental supply and demand. Below this equilibrium is considered to be an undersupplied pool of rental homes, which places upward pressure on weekly rents. For the past five years, Melbourne residential rental vacancy has averaged 3.2%.
Source: McGrath Research, REIA
Melbourne prestige, Q2/26
Houses
Apartments
Residential
Gross rental yield
2.98%
4.80%
3.79%
Change from a quarter ago
+5 bps
+1 bp
+2 bps
Change from a year ago
+23 bps
+15 bps
+20 bps Source: McGrath Research
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Prestige residential rents Update
Prestige rents
Spring/26
+3.5%
Tracking prestige rents Melbourne prestige
Residential rents across Melbourne trended above the weekly prestige rate recorded a year ago. Melbourne prestige property rents rose by 3.5% in the year ending Q2/26, with a rise of 0.2% recorded in the last quarter. Looking back at rental growth over the five years since Q2/21, prestige apartments (66.2%) outpaced prestige houses (32.2%). Prestige apartment rents in Q2/26 were 0.8% above a quarter ago, and were 5.8% higher over the year. In the same quarter, prestige house rents fell by 0.2% after rising 1.6% over the past year. On average, in the past five years, prestige rents grew 8.1% per year.
Source: McGrath Research
Prestige rental outlook
+5%
Forecast for prestige rents Melbourne prestige
The Melbourne prestige residential market is continuing to experience upward pressure on weekly rents. A sustainable number of new homes have been built in Melbourne but only a modest number have been made available in the prestige rental pool. As a result, McGrath Research forecast there will remain upward pressure on rents of 5% at the end of 2026, with a further 4% rental growth likely in 2027.
Source: McGrath Research
Melbourne prestige, Q2/26
Houses
Apartments
Residential
Rental change from a quarter ago
-0.2%
0.8%
0.2%
Rental change from a year ago
1.6%
5.8%
3.5% Source: McGrath Research
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Definitions
Prestige property The most desirable and most expensive property in a given location, generally defined as the top 5% of each market, by value. Prestige sales Melbourne prestige sale transactions hold a threshold of A$3 million. Super-prestige sales Melbourne super-prestige sale transactions hold a threshold of A$5 million. UHNWI An ultra-high-net-worth individual (UHNWI) is someone with a net worth of US$30 million or more.
Guiding you home
Michelle Ciesielski National Head of Research, McGrath Research www.mcgrath.com.au/research
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