Melbourne’s median house price has dropped for the twelfth month in a row. Picture: Jake Nowakowski.
Melbourne’s median house price has declined for its twelfth consecutive month with an almost $2000 cut across October that’s brought its losses to almost $74,000 in a year.
The city recorded a $952,000 median house price in realestate.com.au’s October Home Price Index, as experts warn an expected Reserve Bank interest rate hike on Tuesday would further reinforce the downturn.
The report shows a 0.2 per cent fall for the median house price in Victoria’s capital in October, contributing to an overall 7.2 per cent decline across the previous 12 months.
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Realestate.com.au senior economist Eleanor Creagh says when borrowing capacity falls, many buyers adjust their desired location, property size or type.
Between October 2025 and October 2026, Melbourne’s median house price fell by more $73,000, equating to an average drop of more than $202 a day. Picture: Jake Nowakowski.
That would mean that at the same time a year ago the city’s typical house was worth more than $1m, but has since lost $73,862.
The median price for units rose about 0.1 per cent to $609,000, equating to an about $600 up tick, but is still down more than $16,000 (2.6 per cent) for the year.
The RBA is set to decide on Tuesday whether to raise interest rates following continued high inflation figures last week, which would be the fifth increase in 2026.
Realestate.com.au senior economist Eleanor Creagh said Melbourne’s median house price decline reflected a substantial correction in the market.
“The 2017-19 downturn and the adjustment following the interest rate rises after the pandemic boom also produced significant falls,” Ms Creagh said.
“Another interest rate rise in November would likely reinforce the downturn that’s currently underway.”
The value of a typical house across Melbourne is now just $2000 above the $950,000 cap for the federal government’s 5 Per Cent Deposit Scheme for first-home buyers.
Westpac’s latest Home Ownership Report found that 82 per cent of Victorians agree home ownership is completely out of reach for the average Australian.
Reserve Bank governor Michele Bullock addressing the media in September 2026, after the RBA increased rates to 4.6 per cent. Picture: NewsWire/Nikki Short.
But Ms Creagh said in reality, there was a distinction between being able to save a deposit and the ability to a service mortgage after borrowing costs had lifted substantially.
“The scheme significantly reduces the upfront deposit hurdle, but it doesn’t reduce the repayments on the loan itself,” she said.
“Lower prices can result in greater negotiating power, maybe creating opportunities for some first-home buyers – but higher interest rates may be eroding borrowing capacity faster than prices are improving affordability for others.”
The housing market is holding up better across regional Victoria where prices are cheaper.
Home values in regional Victoria were flat in October, with the $609,000 median house value dropping 0.1 per cent, though it remained 1.4 per cent higher than the same time last year.
The median unit value rose 0.5 per cent to $457,000 across the regions, and has experienced a 3.1 per cent boost over 12 months.
There’s 657 home auctions scheduled in Melbourne this week, down 56 per cent compared to the same time last year.
Westpac’s Carolyn McCann says a range factors influence the ability to buy a home, including the upfront costs of purchasing and a buyer’s income. Picture: Supplied/Westpac.
“As interest rates have risen, substantially buyers’ borrowing capacities have been constrained,” Ms Creagh said.
“As a result, we’ve seen that more affordable segments of the market are holding up better with respect to prices.”
Westpac’s latest Home Ownership Report released last week showed 70 per cent of Victorians are concerned property values could fall further.
It found 44 per cent of Victorians surveyed agreed reducing stamp duty and other purchase costs would help buyers enter the market.
Westpac chief executive, consumer, Carolyn McCann, said while home values had fallen, the bank’s economists expected Australian-wide property prices to rise by 3 per cent in 2027.
Research for the report, commissioned by Westpac and conducted by Lonergan Research, surveyed 1165 Australians.
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