Q2 Market Update: Investors adapt to changing conditions

If you’ve been following the headlines, you could be forgiven for thinking Melbourne’s property market is experiencing a period of softening. What we're seeing across the Jellis Craig network, however, paints a more encouraging picture.

Recent rental law reforms as well as negative gearing and capital gains tax changes have slowed the flow of new investors into the property market. However, demand for rental housing remains exceptionally strong amongst renters, with vacancy rates sitting at historic lows across metropolitan Melbourne and regional Victoria. The ongoing housing shortage continues to underpin demand despite broader economic pressures, reinforcing the long-term appeal of investing in residential property.

These fundamentals continue to support strong rental activity across our property management network. Weekly asking rents for Jellis Craig properties in metropolitan Melbourne sit roughly 15 per cent above market levels¹ - a reflection of both the calibre of homes we represent and the sustained demand for well-located, quality housing.

The right time is your time

Over my 30-year career in real estate, people have always asked me whether the right time is to invest in property. The reality is that trying to time the market perfectly is incredibly difficult - even for the experts.

Market conditions are always worth understanding, but they should rarely be the sole reason for making - or delaying - an investment decision. Recent headwinds, from interest rate rises to changing tax settings, are proving temporary disruptors to a market, but our fundamentals remain strong.

Melbourne still holds a rare affordability advantage with tight rental yields, steady population growth and our dwelling value to income ratio sitting at 7:1². That puts us in a better affordability position than our other Australian capitals. Our regional locations are also standing out, recording 7.8%³ growth in median dwelling values in regional Victoria, supported by strong demographic appeal, relative affordability and solid long-term potential.

Sales market update: Confidence beyond the headlines

From a residential sales perspective, the market has certainly tempered somewhat since March, driven by a combination of higher interest rates, cost-of-living pressures, forecast of tax changes and broader economic uncertainty stemming from global conflict. After several years of extraordinary conditions, we’re seeing a return to a more balanced environment.

Reduced borrowing capacity for some buyers, has naturally flowed through to pricing. At the same time, we’re seeing well-informed buyers recognise the opportunity presented by reduced competition and greater choice, with many choosing to upgrade their primary residence during this period.

We’re seeing this reflected across the Jellis Craig network, where our results continue to outperform the broader market. Our median sale price reached $1,350,000⁴ in Q2, well ahead of the market median of $952,500⁵. Sales activity also strengthened over the quarter, with the number of properties sold across our network increasing by 2.4 per cent in Q2⁶ versus the previous quarter, providing further evidence that well-positioned and presented homes continue to attract confident buyers.

Overall, the picture remains far more positive than the headlines suggest. Behind the short-term shifts, Melbourne’s fundamentals remain exceptionally strong. The city continues to offer outstanding value compared with other Australian capitals, supported by robust population growth, sustained infrastructure investment and an exceptional lifestyle.

We hope this market update has informed your property journey. Whether you are looking to buy, sell or rent your property, contact us today to learn more.

Contact us. 

1. Jellis Craig Data, Median asking rent, Greater Melbourne, 01/04/2026 – 30/06/2026 & REIV, Median asking rent, Greater Melbourne, 01/04/2026 – 30/06/2026

2. Cotality, December 2025, Dwelling value to income ratio, Australian capital cities.

3. Cotality Home Value Index, Home Values, Regional Victoria. 12 months to May 2026.

4. Jellis Craig Data, Median Sale Price, Greater Melbourne, 01/04/2026 – 30/06/2026

5. REIV, Median Sale Price, Greater Melbourne, 01/04/2026 – 30/06/2026

6. Jellis Craig Data, Properties Sold, Greater Melbourne, 01/04/2026 – 30/06/2026