As featured in the Herald Sun and realestate.com.au. Our director Lou Lihari was quoted in coverage of the latest PropTrack figures showing Melbourne home values easing again in July. Here is our full read on what a cooling market means if you are buying or selling right now.
The article, and where we fit in
The latest PropTrack Home Price Index made headlines this week, with the Herald Sun and realestate.com.au reporting that Melbourne’s typical house lost around $5,000 in value over July, roughly $160 a day. Lou was asked to weigh in on what the numbers mean on the ground, and we were glad to.
A falling market makes for a dramatic headline. It is more useful to understand what is actually driving it, and how it changes the decisions in front of you. Speaking to the Herald Sun, Lou pointed to something that does not always make the headline figure: supply.
“I definitely see that supply has been impacted, and it feels worse than it normally does. A lot of the potential sellers who are thinking of going to the market are just too afraid.”
That is the real story of this market. Values are easing, but so is the number of quality homes coming up for sale, because nervous vendors are sitting on their hands. For buyers, that changes things.
What the July 2026 figures show
According to the PropTrack Home Price Index for July:
- Melbourne’s median house value fell $5,000, or 0.5%, over the month to $971,000. That is a fifth straight monthly decline, for a city that still had a $1 million median as recently as April.
- Over the year, Melbourne is the worst-performing capital, down 3.6%, a hit of more than $36,000 to the typical house.
- Melbourne units held up better, easing $1,340, or 0.2%, to a median of $617,000.
- Across all dwellings, Melbourne’s median sits at $829,000, down 0.4% for the month and 2.7% over the year, now 4.4% below its peak.
- Nearly every capital eased in July, but only Melbourne and Sydney are in the red over the past year. Perth is still up around $140,000 on a year ago despite a July dip.
- Regional Victoria is holding firmer. The median regional house eased just over $600 in July to $634,000, but remains close to $30,000, or 4.8%, higher than a year ago.
In plain terms, prices are drifting lower, but the softness is far from uniform. Houses are wearing more of it than units, the premium end more than the affordable end, and the city more than the regions.
Why values are falling
This is not one factor, it is several pulling the same way. Multiple interest rate rises have reduced how much buyers can borrow and how much they are willing to commit. Cost-of-living pressure and softer confidence have made people cautious.
PropTrack senior economist Anne Flaherty made an important point that sets Melbourne apart: new housing supply here has largely kept pace with population growth, unlike most other capitals, which has capped price growth. She also noted the $950,000 first-home-buyer cap under the federal 5% deposit scheme has cushioned the lower end of the market, though its effect is fading after successive rate hikes, and that the median price could fall further.
Layer on Lou’s observation that fewer homes are being listed, and you have a market that is soft on price but also thin on quality stock.
What this means if you are buying
On balance this is a buyer’s market, but a thin one, and that nuance matters.
You have more negotiating leverage than you did a year ago. With values easing for a fifth straight month and less competition at auction, there is genuine room to negotiate and far less pressure to bid emotionally.
But good stock is scarce. Lou’s point about sellers being too afraid to list is the catch. The homes that do come to market in a nervous environment are often either compromised or the result of a genuine need to sell. When an A-grade home does appear, it can still attract competition, because well-advised buyers know quality is rare right now.
Quality holds its value through a downturn. Blue-chip inner Melbourne streets, period homes on good land, and properties with real scarcity fall less and recover first. The gap between an A-grade asset and a compromised one widens in a soft market, so this is exactly the time to be selective rather than opportunistic.
Do not try to pick the bottom. Nobody rings a bell at the low point, and the cost of waiting is often missing the right home when it finally lists. The better discipline is to buy the right property at a fair price with finance you are comfortable with. Having a buyer’s advocate watching the market daily, including the off-market stock that never hits the portals, is worth far more when good listings are scarce.
What this means if you are selling
The “too afraid to list” mood is a genuine opportunity for well-prepared vendors. If most would-be sellers are sitting out, the buyers who are active have fewer quality homes to choose from, and a well-presented, correctly priced property can stand out and sell well.
The key word is correctly priced. Pricing to the market as it is today, not as it was at the April peak, is what gets a result. Overpricing in a soft market leads to a stale listing, and a stale listing sells for less than a well-judged one.
Presentation and method of sale matter more when buyers have the upper hand. With clearance rates soft, auction is not automatically the right route for every home, and a considered private-sale campaign can outperform. That is exactly the kind of objective call our vendor advocacy service exists to make, on your side of the table rather than the agent’s.
Our view
Melbourne has been through softer patches before, and its long-term fundamentals, strong population growth and a chronic shortage of well-located housing, have not gone away. What has changed is the short-term balance of power, and right now it favours prepared buyers and realistic sellers.
If you have been waiting for heat to come out of the market before buying, that has largely happened. The advantage now goes to people who are organised, clear on what they want, and working with someone who watches this market every day and negotiates for a living.
This article is general market commentary, not financial or investment advice. Your own circumstances should guide any property decision, and we would encourage you to seek advice specific to your situation.
Frequently asked questions
How much did Melbourne house values fall in July 2026?
Melbourne’s median house value fell $5,000, or 0.5%, in July 2026 to $971,000, according to the PropTrack Home Price Index. It was the fifth straight monthly decline, and over the year Melbourne was the worst-performing capital, down 3.6%.
Is now a good time to buy in Melbourne?
For prepared buyers, a softer market brings more room to negotiate and less auction pressure. The catch is that fewer quality homes are being listed, so good stock is scarce. The key is buying a quality, well-located property at a fair price with finance in place, rather than trying to time the exact bottom.
Will Melbourne property prices keep falling?
No one can forecast that with certainty, and PropTrack has said the median could fall further. The current softness is driven by higher borrowing costs, cautious sentiment and steady new supply. Melbourne’s longer-term fundamentals, population growth and limited well-located housing, remain strong.
Should I still sell in a falling market?
Yes, if it suits your plans. With many would-be sellers too nervous to list, a well-presented, correctly priced home can stand out. Pricing to today’s market and choosing the right sale method are critical, and independent vendor advocacy helps you make those calls objectively.
