Melbourne Property Market Update - February 2026

January always represents a busy period for our Property Management team with many leases ending and commencing at the start of the year. On any given weekend LongView is conducting more than 50 open for inspections which peaks in January with over 80 inspections across Saturday and Sunday. In January alone we received 6,000 rental applications and processed approximately 700 prospective rental applications! 

Needless to say, we have our finger on the pulse when it comes to what’s happening in the rental market.

The "Two-Speed" Rental Market 

In Melbourne right now, there’s distinctive two speed market based on geography:

• Inner City & Middle Ring: Demand remains strong with vacancy rates at historic lows. Consequently, we continue to see solid rental growth for these properties. Given new legislation prohibiting rental bidding or taking more than one month's rent upfront, it’s vital that a property is priced appropriately. 
  
  At LongView we actively monitor the demand of every rental listing and will adjust the price upwards if we are seeing strong interest before the first open to ensure we are maximising the rent we can achieve, whilst ensuring we remain compliant with the law. It’s amazing how many agencies are not doing this, potentially missing out on thousands in rent. 

• Greenfield Areas (>20km from CBD): In Melbourne’s North and West, a surge in new supply means prospective renters are "spoilt for choice". In these areas, we often receive only one or two applications per property. Rental prices here are flat or, in some cases, softening. In these areas acting quickly with any rental application is paramount as prospective renters have often applied for several properties. Further, if the property isn’t getting any interest, aggressive price reductions are necessary to ensure you are ahead of the competition. Again, some agencies are taking up to 3-4 months to lease a property in this area but not adjusting rental prices to match the market.

At a macro level Melbourne house rents rose 2.5% and unit rents rose 3.5% over 2025. At LongView we achieved rental growth of 4.6% in 2025.

Property Prices – A strong 2025 but momentum possibly softening…

• Melbourne's property prices returned to growth in 2025, rising 4.8% following a softer 2024.  

• Brisbane continues to lead the major eastern capitals, with annual dwelling price growth reaching 14.5%.  

• Sydney dwelling values grew by 5.8% over the year. 

Across all capitals, lower-price point properties, led this growth, given the new incentives for first homebuyers.

Looking ahead in 2026, we potentially have momentum coming out of the market with the recent interest rate rises, but this will likely continue to be offset by strong Population Growth, still running at >1.5%, adding more than 400,000 nationally, a disproportionate number of which arrive in Melbourne. Unlike other capitals however, Melbourne has more properties for sale compared to the five-year average, so again potential buyers in many segments of the market have lots of choice.

The federal government has also flagged potential changes to the Capital Gains Tax concessions in the upcoming May federal budget. Whilst it’s unclear as to what impact these changes will have for property investors, we know that uncertainty around tax policy generally leads to investors remaining on the sidelines. Indeed, the uncertainty of change often leads to weaker short-term growth than any actual changes.

Our industry colleague, Nerida Consibee, Chief economist of Ray White, recently published a blog of the likely impact the changes will have on the rental market which is well worth a read – read it here

Are you prepared to maximise your tax savings?

In speaking with several clients recently, I’ve been amazed at how many of our clients are not taking advantage of tax depreciation deductions on their investment property. In some cases, clients are potentially missing out in thousands in annual cash savings. There are several deprecation providers that will provide a free estimate of what your likely deductions are, including the tax savings available. Whilst the potential deductions vary greatly depending on your property and personal circumstances, in most cases it is worth having a deprecation schedule.

If you don’t have a tax deprecation schedule, please reach out to me and we can connect you with a registered professional.

Thank you for entrusting us to manage your property. It is a privilege we do not take lightly. We look forward to continuing to partner with you in 2026 and helping you succeed in your property journey.

Tim Beasley

Managing Director of Property Management