Melbourne’s property market is presenting what many analysts describe as a countercyclical opportunity for investors. After price softness through much of 2024, the market began recovering in 2025, and strong population growth, infrastructure investment, and economic diversity are now supporting renewed demand. For investors with a long-term strategy, this environment may offer a window to secure quality assets before Melbourne’s next growth phase accelerates.
For buyers considering entering the market, understanding lending strategy and borrowing capacity through options such as investment home loans can help position investors to act when opportunities appear.
Key Takeaways
- Melbourne is forecast to be one of Australia’s strongest property markets in 2026
- The city is benefiting from population growth, infrastructure investment, and economic diversity
- Investment grade homes in inner and middle ring suburbs remain in short supply
- Experts recommend focusing on family homes, townhouses, villa units, and boutique apartments
- Long-term strategy and property fundamentals remain critical for investors
Melbourne’s Property Cycle Is Entering a Recovery Phase
Melbourne has long been considered one of Australia’s strongest long-term property investment cities. According to KPMG’s latest Residential Property Outlook, the city is expected to be a standout performer in 2026.
After a period of price declines through much of 2024, property values began to rebound during 2025. This recovery has been supported by strong population growth, ongoing infrastructure spending, and the city’s diversified economy.
For investors, the current phase of the cycle presents what analysts often describe as a countercyclical opportunity, where property values are still relatively accessible compared with other capital cities.
Investment Grade Homes Remain in Tight Supply
Inner and middle ring family homes continue to attract strong demand, particularly from owner occupiers seeking space, lifestyle amenities, and proximity to schools and transport.
These properties are often viewed as stronger long-term investments compared with high-rise or off-the-plan developments.
Savvy investors are increasingly focusing on investment grade properties that demonstrate strong fundamentals such as location, land value, and long-term demand drivers rather than chasing short-term market trends.
Financing structures for these types of purchases often involve lending solutions such as home loans or tailored investment lending strategies.
Experts Say It Is Not Too Late to Enter the Market
According to property analyst Michael Yardney, investors still have an opportunity to enter the Melbourne market despite several months of price growth.
He believes Melbourne remains a compelling investment destination due to its long-term economic strength, population growth, and cultural vibrancy.
However, Yardney emphasises that success in the current market depends on buying the right property in the right location rather than purchasing broadly across the city.
Three Property Types Investors Are Targeting
Michael Yardney’s latest property report identifies three types of properties that are performing well in Melbourne’s current market.
Family Friendly Homes
Detached homes suitable for families remain highly sought after. Demand is being driven by buyers seeking space and proximity to amenities such as schools, parks, and transport.
Population growth through domestic migration and international arrivals continues to support demand for these homes.
Many of these opportunities are located in middle ring suburbs such as:
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- Mount Waverley
- Glen Waverley
- Mitcham
- Blackburn
- Ringwood
- Essendon
- Moonee Ponds
- Bentleigh
- Cheltenham
- Mentone
- Parkdale
Townhouses and Villa Units
Townhouses and villa units are becoming increasingly attractive to buyers who are priced out of standalone houses but still want to remain close to established suburbs.
These properties often offer a balance between affordability and lifestyle, making them appealing to both owner occupiers and investors.
For investors expanding their property portfolio, funding solutions such as property development finance may also be relevant when purchasing or redeveloping townhouse sites.
Boutique Apartments in Premium Locations
Two bedroom apartments in boutique developments are also seeing strong demand, particularly from renters such as young professionals, students, and downsizers.
These properties tend to be low-rise developments with modern finishes and unique design features, making them more attractive than large high-density towers.
Locations with strong lifestyle amenities and employment access continue to drive rental demand for these properties.
Investors acquiring these types of assets may also consider financing strategies such as commercial investment loans depending on the property structure.
What Investors Should Avoid in the Current Market
While Melbourne offers many opportunities, Yardney’s report also highlights areas investors should approach cautiously.
Properties located in outer suburbs, regional locations, or areas experiencing higher crime rates may carry greater long-term investment risk.
Instead, investors are encouraged to focus on established suburbs with proven demand, strong amenities, and limited housing supply.
Learn More About Perry Finance
To learn more about financing options for property investors, visit Perry Finance or speak with an adviser through the contact page.
