renters

Melbourne’s housing market is currently a fascinating anomaly. While cities like Brisbane, Adelaide, and Perth have experienced explosive growth in recent years, Melbourne has charted a different course – one of relative stability. But what does this divergence mean for the future, and what lessons can other cities learn?

The Great Divide: Melbourne vs. the Boomtowns

Recent data reveals a stark contrast. Over the past five years, Melbourne dwelling values have risen by a modest 15.5%, while Brisbane, Adelaide, and Perth have seen increases of nearly 80-90%. This isn’t just a slight difference; it represents a fundamental shift in market dynamics. The gap between Melbourne and Sydney prices, now at over $600,000 median difference, is the widest it’s been since 1999.

Investor Retreat and Policy Impacts

A key driver of Melbourne’s slower growth is a noticeable investor exodus. Changes to land tax and absentee owner surcharges in Victoria, introduced as part of COVID debt relief measures, have made property investment less attractive. Cotality estimates an additional $1,300 in annual land tax for properties valued at $650,000. Coupled with tightening tenancy laws and rising interest rates, the financial burden on landlords has increased significantly.

This has led to a measurable decrease in rental properties, with Victoria shedding approximately 16,500 rentals in the first year of the new tax settings.

The Rise of the First Home Buyer

However, the investor retreat hasn’t been entirely negative. The slower price growth has created opportunities for first home buyers, who now comprise around 27% of demand in Victoria. Melbourne’s relative affordability – with a dwelling price-to-income ratio of 7.1 compared to Sydney’s 10 – is a significant draw.

“It’s actually seen Melbourne become one of the more affordable capital cities – absolutely the most affordable of the major capitals.”

Tim Lawless, Cotality

Looking Ahead: What’s on the Horizon?

The future of Melbourne’s property market is likely to be shaped by several factors. While the current stability is welcomed by many, it’s not without potential drawbacks. Experts predict a softer year for housing markets nationally in 2026, with interest rates potentially holding or even rising.

Stubbornly high construction costs, particularly for medium and high-density housing, could limit the supply of new homes, potentially reversing the trend of affordability. Furthermore, a long period of negative interstate migration and above-average housing delivery have contributed to the cooling effect, and any shift in these trends could alter the market’s trajectory.

Tim Lawless is the chief analyst at property analytics firm Cotality.
(ABC News: Geoff Kemp)

Equity and Affordability: A Complex Picture

While stabilising prices is generally positive, it’s crucial to acknowledge the equity implications. Lower median dwelling values don’t necessarily translate to affordability for low-income households. Data shows price increases are still occurring in traditionally affordable areas like Frankston and Brimbank, potentially exacerbating existing inequalities.

Ultimately, Melbourne’s property market presents a unique case study in balancing investor interests, first home buyer opportunities, and broader economic considerations. Its trajectory will be closely watched by policymakers and market participants alike.

Frequently Asked Questions (FAQ)

Why is Melbourne’s property market different?

Policy changes impacting investors, coupled with a period of increased housing supply and negative interstate migration, have contributed to slower growth.
Is Melbourne still affordable?

Compared to Sydney and other capital cities, Melbourne is more affordable, but affordability remains a challenge for low-income households.
What’s the outlook for 2026?

Experts predict a softer year for housing markets nationally, including Melbourne, with potential impacts from interest rates and construction costs.

Pro Tip: Before making any property investment decisions, consult with a financial advisor and conduct thorough market research.

What are your thoughts on Melbourne’s property market? Share your insights in the comments below! Explore our other articles on Australian property trends and first home buyer guides for more in-depth analysis. Subscribe to our newsletter for the latest updates.

A Personality Assessment?

Goldstein, who says he doesn’t consider credit scores when evaluating applicants, believes the information provides insight into a potential tenant’s personality. He even expressed a preference for Leos, stating, “You’re your own boss. You’ll change every light bulb. You’ll never call us.” He also noted he welcomes tenants with pets. Goldstein, who operates his business from century-old buildings like The Mauretania in Hancock Park, says his method helps him find tenants who will appreciate his properties.

Did You Know? Dave Goldstein prioritizes a “personal touch” in his tenant screening, preferring to avoid the impersonal nature of simply reviewing applications.

Goldstein also asks applicants about their hometown and the color of their car, a practice he acknowledges surprises some people. However, he believes it fosters a more personal connection than typical landlord-tenant interactions.

Legal Concerns Arise

While Goldstein maintains he has tenants of all astrological signs and intends to continue the practice, housing rights experts suggest it may be legally questionable. Attorneys at the Housing Rights Center and Public Counsel point to the California Unruh Civil Rights Act, which prohibits discrimination based on a number of personal characteristics.

Expert Insight: The California Unruh Civil Rights Act is remarkably broad in its protections against discrimination. While astrology isn’t explicitly listed, the law’s expansive nature could be interpreted to cover decisions based on astrological sign, particularly if those decisions result in unequal treatment.

Although there’s no specific legal precedent prohibiting screening based on birth month, lawyers argue that asking about astrological signs could be seen as arbitrary and potentially discriminatory, as individuals have no control over their astrological sign.

Frequently Asked Questions

What does Dave Goldstein look for in a tenant?

Dave Goldstein looks for tenants whose personality traits align with his expectations, as determined by their astrological sign. He specifically mentioned a preference for Leos, believing they are self-sufficient and require minimal landlord intervention.

Does Goldstein consider credit scores when screening tenants?

No, Dave Goldstein stated he does not care about credit scores when evaluating potential renters.

Is it legal to ask prospective tenants about their astrological sign?

Housing rights attorneys say there is no specific law banning landlords from asking about astrological signs, but it could potentially violate the California Unruh Civil Rights Act due to the arbitrary nature of the question.

Could this unusual screening practice face legal challenges, or might other landlords adopt similar methods?

How Melbourne became a headline-making city as home prices elsewhere soared