Melbourne’s cheapest homes resist downturn as lower-quartile prices rise

Melbourne’s housing downturn is not delivering the same price relief across every part of the market, with new Real Estate Institute of Victoria data showing some of the city’s cheaper segments continued to rise over the past year.

The REIV’s September-quarter figures showed a 0.7 per cent quarterly decline across metropolitan Melbourne’s broad market comparison. However, analysis of the lower quartile — the price point separating the cheapest 25 per cent of sales from the remainder — found annual increases in numerous suburbs.

That matters because first-home buyers and households whose borrowing capacity has fallen are generally competing in this part of the market. A decline in Melbourne’s overall median does not guarantee that the homes within an individual buyer’s budget have become cheaper.

Affordable segments record the strongest growth

Mornington recorded the largest annual increase among the lower-quartile results highlighted in Monday’s reporting. Its lower-quartile price reached $920,000, up $99,000 or 12.1 per cent over the year.

In Caroline Springs, the comparable price increased by $75,000 to $735,000, an annual rise of 11.4 per cent. Glenroy’s lower-quartile result climbed $74,000 to $796,000, while Frankston North increased $50,000 to $640,000.

Other increases included Carrum Downs, where the lower-quartile price rose 9.2 per cent to $770,000, and Sunbury, where it increased 8.3 per cent to $665,000.

The dollar amounts also show that “lower quartile” does not necessarily mean inexpensive. Fitzroy North’s lower-quartile price was $1.417 million after a 10.3 per cent annual increase. The measure describes the cheapest quarter of sales within each suburb, not a common affordable price bracket across Melbourne.

Buyers are being compressed into fewer options

The pattern is consistent with buyers concentrating in the parts of Melbourne they can still finance. Four interest-rate increases during 2026 have reduced borrowing capacity, pushing more purchasers towards smaller homes, outer suburbs and lower-priced pockets within otherwise expensive areas.

The expanded first-home buyer guarantee also supports eligible purchases with deposits as low as 5 per cent, subject to the scheme’s rules and price caps. In Melbourne, properties below the applicable cap can consequently attract first-home buyers alongside downsizers and other purchasers whose budgets have been reduced by higher rates.

This creates a divided market. Expensive properties can weaken as highly leveraged buyers retreat, while entry-level homes remain supported by a larger pool of people competing within similar limits.

The trend does not mean every cheaper home is increasing in value. Property condition, land size, transport access, owners corporation costs and the number of comparable listings can still produce very different results within one suburb.

Quartile figures need careful reading

The REIV says median and quartile prices are measures of recorded sales rather than valuations of every property. Results can be influenced by the mix of homes sold during a quarter, and the latest figures are preliminary before later revisions.

A rising lower quartile could partly reflect better-quality properties making up a larger share of the period’s cheaper sales. Buyers should therefore check recent comparable transactions rather than applying a suburb-wide percentage increase to an individual home.

For sellers, the data indicates that well-presented properties at accessible price points may have a deeper buyer pool than the city’s overall downturn suggests. Pricing still matters: buyers facing reduced loan approvals have a firm ceiling and may be unable to bridge even a modest gap.

The clearest message is that Melbourne’s correction is occurring unevenly. Buyers waiting for headline price falls to reach entry-level homes may find that competition at the lower end remains stronger than the city-wide figures imply.

What it means for you

• Buyers should track recent sales in their exact price bracket instead of relying on Melbourne’s overall median movement.
• Allow for strong competition where a property sits below first-home buyer scheme caps or common loan limits.
• Sellers of entry-level homes may face more demand than vendors higher up the market, but realistic pricing remains essential.
• Treat preliminary median and quartile figures as market guides, not valuations of a particular property.