Top 10 best suburbs to invest in Melbourne in 2026
From the ultra-trendy inner city to the relaxed coast, Melbourne’s suburbs offer a lot. But where are the best opportunities for investors looking for a spot in Melbourne’s property market?
The ‘best’ suburb will vary based on your budget, strategy, and risk tolerance, and various investors have various opinions on what positions a suburb among the ‘best’ in its class. One might consider vacancy rates the deciding factor, while another might pay more attention to local economic growth or buyer demand.
For our purposes, we’ve considered Cotality data highlighting suburbs boasting the largest annual growth in median property values in the 12 months to July 2026:
Rank | Melbourne | Median | Annual |
|---|---|---|---|
1 | Melton | $543,355 | 8.3% |
2 | Sunshine West | $752,942 | 6.5% |
3 | Botanic Ridge | $969,302 | 6.4% |
4 | Melton West | $626,511 | 6.4% |
5 | Melton South | $567,441 | 6.3% |
6 | Albion | $543,787 | 6.3% |
7 | Keilor Park | $946,703 | 6% |
8 | Ripponlea | $605,709 | 5.9% |
9 | Burnside | $852,521 | 5.4% |
10 | Coolaroo | $622,882 | 5.4% |
Source: Cotality, July 2026
What do you need to know about the Melbourne property market in 2026?
Melbourne may be Australia’s second-most populous city, but its property prices are significantly lower than those of Sydney. It experienced growth during the pandemic, but more recent years have seen a cooling off, which has continued into 2026.
Cotality data shows dwelling values in Melbourne dropped by 1.2% in July 2026 after reaching their peak in 2022.
As of July 2026, the median dwelling value in Melbourne is $797,354.
House prices in the city fell 4% to a median value of $936,528 in the July 2026 quarter, while unit prices experienced a much smaller drop of 2% to $632,021.
Other considerations:
- Vacancy rates: According to SQM Research, Melbourne’s vacancy rate has steady at 1.6% in June.
- Sales volumes: Cotality data shows sales volumes for Melbourne increased by 3.9% in the 12 months to June 2026.
- Rental growth: Melbourne’s rental market experienced growth of 4.9% in the year up to June 2026, per Cotality.
- Rental yield: According to Cotality, Melbourne’s gross rental yield has increased by 3.9% in the year to June 2026. Domain’s June 2026 rental report shows the average houses in Melbourne rent for $600 per week, and units for $600 per week.
- Infrastructure spending: The Victorian state government’s 10-year plan for Melbourne’s greenfields hopes to deliver 180,000 new homes in the city's newest suburbs.
What is impacting price growth in Melbourne?
General cost of living pressures and rising core inflation are no doubt impacting growth, but additional factors may be contributing to Melbourne’s slowdown and lower investor demand.
- RBA cash rate hikes: RBA cash rate hikes in 2026 have prompted lenders to increase home loan rates and put pressure on borrowers.
- Proposed changes to negative gearing and CGT: Proposed legislation attempting to drive investors towards new builds over existing properties, announced in the 2026 Federal budget, has likely contributed to cooling investor interest.
- State-specific policies and taxes: A series of recent reforms by the Victorian state government, including slashing the tax-free threshold for land tax, have made the state a less appealing prospect for investors.
Melbourne property market forecast: Where to from here?
Economists at the nation’s big four banks make forecasts about what’s to come for dwelling prices in the nation’s major property markets.
The big four banks generally agree that Melbourne will experience a decline in dwelling prices in 2026, but things should pick up in 2027.
- ANZ: Economists at ANZ forecast annual growth of housing prices to drop 9.2% in 2026, and fall a further 2.4% in 2027.
- CommBank: CommBank economists are predicting dwelling prices in Melbourne will drop 7% in 2026 before lifting 3% in 2027.
- NAB: Economists at NAB are forecasting a decrease in Melbourne dwelling prices of 7% in 2026, followed by a rise of 2% in 2027.
- Westpac: Westpac economists are predicting a drop of 4% in Melbourne dwelling prices in 2026, but are expecting a bounce back of 5% in 2027.
What other factors could impact Melbourne property prices?
- Melbourne’s North East Link: This transport initiative is expected to reduce travel times, take 15,000 trucks off local roads, and better connect Melbourne’s north east.
- Suburban Rail Loop: As part of Victoria’s Big Build project and to support Melbourne’s anticipated population growth in the next couple of decades, the Suburban Rail Loop is expected to better connect Melbourne’s suburbs to support new housing developments with trains forecast to be operating by 2035.
What to consider when buying Melbourne property
Melbourne's population is expected to overtake Sydney's in the next few decades, projected to reach 6.5 million to 9.9 million residents by 2071, according to the ABS.
However, there is much to consider when buying an investment property in Melbourne beyond pricing and demand trends.
- Flood and fire risk: Much like other cities in Australia, Melbourne is prone to bushfires and flooding in some areas.
- Transportation: Public transport, including trains, buses and the iconic tram network, is typically available across most of Melbourne, but some areas might not be as connected as others.
- Local services and amenities: Most of Melbourne is well connected to healthcare, education, shopping and other amenities and services, however some newer and developing suburbs might not have access to as many facilities and services as the more established areas.
