Melbourne’s Split Market: The Suburbs Rising and Falling

If you’ve been following the headlines, you’d be forgiven for being confused. Some say Melbourne prices are falling. Others say the market is holding strong. The reality is both are true.

Over the past six months, Melbourne has become a split market where outcomes vary depending on price point, property type and suburb.

Across Melbourne, we’re continuing to see resilience in a number of pockets, particularly where affordability and lifestyle intersect.

In the south-east and bayside fringe:

Frankston +2% to +4% over the last 6 months
Seaford +3% to +5% over the last 6 months
Carrum +2% to +4% over the last 6 months

These areas continue to benefit from relative affordability, strong rental demand and ongoing buyer migration from more expensive bayside suburbs.

We’re also seeing steady performance in:

Reservoir +1% to +3% over 6 months
Werribee +2% to +4% over 6 months

What’s common across these markets is that they sit in the attainable price bracket, and that is exactly where demand is strongest right now.

At the other end of the spectrum, Melbourne’s premium markets have continued to soften.

Toorak -2% to -4% over 6 months
Brighton -1% to -3% over 6 months
Camberwell -1% to -2% over 6 months

We’re seeing longer time on market, more vendor discounting and fewer buyers competing at the top end. Even lifestyle-driven markets are feeling it:

Prahran -1% to +1% over 6 months
St Kilda West -2% to 0% over 6 months

Then there’s the in-between suburbs, and this is where things get more nuanced.

Preston 0% to +2% over 6 months
Bentleigh -1% to +1% over 6 months
Moorabbin 0% to +2% over 6 months

In these suburbs, A-grade homes are still attracting competition, while B and C-grade stock is sitting longer and often selling below initial expectations. This is a shift from the environment of recent years where almost everything was being absorbed quickly.

This split is being driven by a few key forces.

Affordability ceilings
Buyers cannot stretch as far as they could 12 to 18 months ago. This is pushing demand into suburbs like Frankston, Seaford and Reservoir.

Interest rate pressure
Higher repayments are impacting borrowing capacity, particularly at the top end of the market in suburbs like Toorak and Brighton.

More stock, less urgency
With listings increasing post-summer, buyers have more choice and combined with above factors are choosing to take more time to make decisions.

In this environment, we’re seeing strategic buyers targeting A-grade properties in softened premium suburbs, focusing on growth corridors like Seaford, Carrum and Werribee, negotiating harder on listings that have been sitting for longer periods, and taking a suburb-by-suburb approach rather than relying on Melbourne-wide headlines.

Melbourne isn’t in decline, it has just become more selective. Some suburbs are still rising quietly, some are flat, and others are softening. The key is knowing the difference and buying accordingly.