April 2026 column
A lot has changed in the space of a month with war breaking out in the Middle East, inflation looking to be higher for longer leading to higher interest rates for longer. Meanwhile there are signs of a slowing housing market on the back of these conditions and the elevated volume of stock available for sale.
Let’s look at the data.
Inflation pressures are mounting
The February 2026 inflation data pre-dates the outbreak of the war and the significant spike in oil prices. Nevertheless, headline inflation was 1.3 per cent higher over the three months to February 2026 and 3.7 per cent higher over the year whilst the Reserve Bank’s preferred measure, underlying inflation, was 0.8 per cent higher over the quarter and 3.3 per cent higher over the year.
Both measures remain well above the RBA’s inflation target of 2.5 per cent annual inflation.
Interestingly, transportation costs were 0.2 per cent lower over the past year but with the spike in oil prices this is an area where we would see a significant rise in inflationary pressures.
Inflation in Melbourne was 1.3 per cent higher over the past three months and 3.3 per cent higher over the past year with only Darwin having a lower annual rate of inflation; however, all cities were seeing inflation well above the Reserve Bank’s target.
These inflationary figures before the war in the Middle East point to the need for interest rates to rise and that pressure is likely to be exacerbated further due to the conflict.
For those looking to buy a home this means that borrowing capacities are likely to reduce but it also means you’re likely to have less competition to purchase. For those looking to sell, higher rates will likely result in fewer buyers and actually securing a signed contract will probably take longer.
Interest rates
Following consecutive interest rate increases in February and March the RBA doesn’t meet in April but is scheduled to meet early in May.
With the cash rate currently sitting at 4.1 per cent it is widely expected that interest rates will rise further, at least another two times this year, with the next increase potentially happening next month.
I think the likelihood of higher interest rates is strengthened by the war in the Middle East; however, some recent reads on consumer and business confidence show that both have plummeted.
If higher interest rates and higher inflation lead to households seriously tightening their belts this could see inflation ease quicker, the economy slow significantly and it may necessitate the Reserve bank to reduce interest rates sooner than many think.
I continue to believe the households with a pre-approval now have a level of urgency to purchase which could see sales volume hold-up for a while.
Thereafter, borrowing capacities will be reduced and I expect there will be fewer active buyers in the market. Selling may become more difficult and we may see some moderate declines in housing prices in Victoria.
Dwelling prices are slightly higher but continue to grow at a slower pace than the other states
The latest REIV data shows that the median house price in Melbourne in March 2026 was $960,000 and the median unit price was $647,500. House prices were 0.5 per cent higher over the month and 5.2 per cent higher over the year while unit prices were 0.4 per cent higher over the month and 3.6 per cent higher over the year.
Although prices were higher in Melbourne over the month and year, price growth in the Melbourne housing market remains much weaker than most other regions throughout the country. While people like to see their largest asset increasing in value, the lower growth is making housing in Melbourne relatively more affordable than the other capital cities.
In regional Victoria, median house prices are $645,000 and have increased by 0.8 per cent over the month and 7.5 per cent over the year. Median unit prices in regional Victoria were 1.1 per cent higher over the month and 7.6 per cent higher over the year.
Price increases throughout the state remain moderate and Victoria continues to show strong relative affordability. The challenge remains that few people are moving to Victoria and the volume of stock available for sale remains elevated.
For sellers it means it’s imperative to differentiate your property from others and set a realistic initial listing price and of course respond to market feedback. For those looking to purchase there is more choice and less urgency; however, well-priced quality homes are still seeing quite strong demand and require buyers to act quickly.
Rents were unchanged throughout most of the state in March 2026
Melbourne’s median house rent in March 2026 was $580 per week and it was unchanged over both the month and year. The median unit rent in Melbourne was $600 per week and was unchanged over the month and 4.3 per cent higher over the past year.
The relatively sluggish growth in rents is reflective of less rental pressure due to a rental vacancy rate of 2.5 per cent in Melbourne. As net interstate migration improves (which is starting to happen) and net overseas migration remains elevated I would expect more rental pressures to appear. Especially given rents in Melbourne are much more affordable than in most other capital cities.
Throughout regional Victoria, the median weekly house rent is $520 and the median weekly unit rent is $420. House rents were 4 per cent higher over the month and 6.1 per cent higher over the past year. Unit rents were unchanged over the month but 7 per cent higher over the past year.
Regional Victoria has a lower rental vacancy rate than Melbourne albeit it is still somewhat elevated at 2.3 per cent, up from 2.1 per cent a year earlier.
Renters across Victoria have relatively more choice than they do in most states and they pay lower weekly rents. It will be interesting to monitor the rental market over the coming months, as higher interest rates potentially reduce demand to purchase we may see rental vacancy rates tighten, especially with a lower supply of new rental housing stock.
The supply of housing stock for sale in Melbourne remains at historically high levels
The latest data from SQM Research found that in March 2026 there were 19,940 newly listed properties the highest of any capital city and 1.6 per cent fewer than the previous month but 12.5 per cent more than in March 2025.
Melbourne has seen the largest annual rise in new listings of any capital city and a much greater rise than the 5.4 per cent increase nationally.
In March 2026, Melbourne has 42,241 total property listings, the highest volume of any region in the country. Total listings were 2.9 per cent higher over the month and 4.7 per cent higher than a year ago.
Again, Melbourne is a bit of an outlier with the 4.7 per cent annual increase the largest rise of any capital city and directionally different to the 6.7 per cent fall in total listings nationally.
The heightened volume of stock coming to market and the already high volume of stock for sale is a key contributor to the much weaker price growth being experienced in Melbourne.
Well-priced quality stock is still transacting but the buyer pool is thinning out and those who are purchasing have more choice and less competition.
Achieving a signed contract is a challenge and there is a very real likelihood with higher interest rates we see more stock to come to the market and fewer buyers which makes for a more challenging sales process and potentially lower prices.
Agents really need to be clear on the value of a home when listing and communicate regularly with vendors about price and product feedback. First impressions when bringing a property to market are imperative if you want a successful sale at a price close to the initial list price.
Properties are selling quicker than a year ago however, days on market is trending higher
Private sales that occurred during March 2026 were selling quicker than a year ago but longer than the previous month according to the REIV.
The median days on market of these sales in Melbourne was 37 days in March 2026, up from 33 days in February but lower than the 41 days in March 2025.
Outside of Melbourne, the median days on market was 51 days in March 2026, up from 50 days in February 2026 but lower than the 63 days in March 2025.
Recall that this is the median value so as many properties are taking longer to sell than are selling quicker which is important to consider in your conversations with vendors. The data also finds that the outer suburbs where housing is generally cheaper are seeing the lowest days on market.
The data continues to highlight that properties that are recently listed and are well priced and presented have a good chance of selling quickly. Those that aren’t run the risk of staying on the market for sale for a long time.
Agents should understand a vendor’s urgency and motivation to sell and depending on their motives carefully consider if it is a listing you want to take on.
For vendors, it’s imperative that you attract attention as soon as you hit the market, price the property well and make it as appealing as possible to buyers.
For those properties that are well priced and presented buyers are likely to still see some purchasing competition.
The undersupply of new housing construction continues in Victoria
Over the past month, new data on dwelling commencement, dwelling completions and dwellings under construction were released for the December 2025 quarter and it shows an ongoing insufficient supply of new housing in Victoria.
Over the December 2025 quarter there were 13,489 dwellings commenced across the state which was 0.5 per cent lower than the previous quarter but 8.4 per cent higher than a year ago. On an annual basis, 56,513 new dwellings were commenced in the state which was the highest volume since March 2023.
58 per cent of the commencements over the year were houses with the remaining 42 per cent other dwellings.
Victoria recorded 13,678 dwelling completions over the December 2025 quarter which was fewer than the previous quarter and fewer than the December 2024 quarter. Over the 2025 calendar year, there were 54,156 dwelling completions across the state which was the fewest since December 2014.
Of those dwellings completed over the year, 64 per cent were houses and 36 per cent were other dwellings.
At the end of 2025, there were 60,527 dwellings under construction in Victoria, the lowest volume since the end of 2024.
At the end of the year, 36 per cent of all properties under construction were houses and 64 per cent were other dwellings.
It is important to understand that while there is a lot of stock for sale across Victoria right now and home prices aren’t rising rapidly, it is largely short-term market conditions driving this weakness.
With a rapidly rising population and households forming larger household sizes there are many people that would like their own home but aren’t in a position to purchase or rent one.
The persistent insufficient supply of new housing, which is likely to worsen as interest rates rise and stay elevated for longer, will over time likely push prices higher once interest rates fall, affordability and borrowing capacities improve.
Final thoughts
Victoria’s housing market is a steady performer; however, relative to other states, prices to buy and rent are lower, price and rent rises are lower and buyers have more choice.
As an agent it is imperative that you clearly explain these market conditions to your vendors and ensure they have the right motivation to sell and a willingness to price their home at the current market.
These conditions afford would-be buyers more choice and more scope to negotiate; however, they still need to act quickly for appropriately priced and well-presented properties as there remains sufficient demand for those homes.
Rental growth has moderated but with less new housing supply likely and the persistent strong increase in the population I expect the slowing of rental growth will be temporary. Even still, renters’ budgets are tight and landlords should be cautious about how much they increase rents.
About Cameron Kusher
Over the last 20 years Cameron has worked as a property researcher for major businesses such as PRDnationwide, CoreLogic (now Cotality) and REA Group.
Cameron spent 12 years at CoreLogic as the Head of Research for Australia and 5.5 years at REA Group as the Director of Economic Research. Over the past 17 years he has become a well-regarded thought-leader on the residential property market and delivered thousands of presentations to the industry, customers and consumers.
He is passionate about taking complex economic and property insights and making them easy for anyone to understand, free of the jargon that most economic and property presentations tend to contain.