Melbourne’s Property Market Has Changed — So Who Is Buying?

Melbourne’s property market: who is buying in a falling market?

Spring is traditionally the busiest time in Melbourne’s property market.

But this year has been different. Why?

A number of factors are contributing to the quieter market:

These factors have translated into much lower stock levels than we would normally expect to see in September.

Last weekend, Melbourne’s property market saw relatively low auction numbers and lower clearance rates compared with the same time last year.

This is partly due to the quality of stock currently coming to market, which has generally been average to below average. Many scheduled auctions have been cancelled.

There are also buyers sitting on the sidelines, concerned that if they buy now, there may be better opportunities ahead – particularly if property prices fall further.

How will buying a property change under the new quoting and reserve legislation?

The new quoting and reserve requirements coming into effect in October 2026 will change the way both auctions and negotiations play out.

As agents and vendors adjust to greater transparency around reserve prices, buyers will need to spend more time understanding property values and, importantly, how negotiations may unfold once an auction has finished.

We expect to see more properties pass in at auction and then sell afterwards, with negotiations moving from the public auction environment into private, one-on-one discussions.

This is where things can become tricky for buyers.

Once a property has passed in, the dynamics change. A buyer is no longer negotiating in front of a crowd of competing bidders. Instead, they may be negotiating directly with an experienced agent who is working to achieve the best possible outcome for the vendor.

The pendulum can therefore shift quite quickly towards the vendor in a private negotiation.

For buyers who are less experienced with negotiation, there can be a temptation to focus on simply getting a property below the advertised reserve or avoiding paying ‘too much’. But the more important question is whether the price represents good value for the property itself.

We also expect buyers may see some relatively high reserves displayed.

If a property passes in and is subsequently purchased below that advertised reserve, it could create a sense of confidence that the buyer has achieved a particularly good result – even though the reserve itself may not necessarily reflect the property’s underlying market value.

This is why understanding value before entering into a negotiation is so important.

For buyers who are less confident when it comes to price assessment and negotiation, a good buyer advocate can help level the playing field before negotiations begin.

With almost 40 years of combined experience working exclusively for buyers and negotiating on their behalf, we can help our clients understand where a property sits in the market, establish an appropriate price strategy and prepare for the different scenarios that can arise when a property passes in.

So, who is buying in Melbourne’s current market, and who can benefit from a softer market?

First home buyers

For first home buyers, a falling or slower market can create opportunities that may not exist when competition is stronger.

With nothing to sell, rising weekly rents and an increase in the availability of smaller homes – many of which were traditionally purchased by investors – some younger buyers are finding they have more choice and negotiating power.

It can be an opportunity to get into the market without having to compete as heavily with established buyers.

Upsizers

For couples and young families who have outgrown their current home, a softer market can also work in their favour.

If both the property being sold and the property being purchased have fallen by a similar percentage, the dollar gap between the two properties can become smaller.

For example, if both properties fall by 10%, the dollar reduction on the more expensive property will be greater. This can make the cost of moving up the property ladder more manageable than it would be in a rising market.

That said, we always encourage buyers in this position to take a conservative view of the value of their existing property – particularly if they intend to purchase before selling.

Opportunistic buyers

There are also buyers in the market who don’t need to buy immediately but recognise that softer conditions can create opportunities.

Some are looking for properties that are distressed or being sold at levels below where they may have traded a few years ago.

While this can sometimes feel uncomfortable, a transaction can be mutually beneficial where there are limited buyers for a property and a vendor needs to sell for personal, financial or emotional reasons.

The key is understanding why the property is being sold and making sure the price reflects the property’s fundamentals and any risks involved.

Renovators

Many buyers are still reluctant to purchase a property that needs significant work.

Yes, renovation costs have increased. But where the fundamentals are right – location, orientation and floorplan – properties requiring renovation can represent an interesting opportunity in the current market.

A genuine ‘renovator’s delight’ may allow a buyer to get into a suburb or particular precinct that might otherwise be out of reach.

Once purchased, the renovation can be completed in stages and tailored to the owner’s budget and priorities.

The result can be an updated home in a great location, while also providing the opportunity to benefit from any future improvement in the market – or simply enjoy the home for what it is.

Who isn’t looking to buy?

There are some obvious groups who are currently less active in the Melbourne market.

Investors

Recent property tax changes have had a significant impact on investors.

Add increasing compliance requirements and minimum rental standards, and the additional cost and risk associated with residential property investment can make the prospect of long-term growth less attractive to some investors.

With fewer investors actively competing for certain properties, this can also influence the type of stock coming onto the market.

International buyers

International buyers are facing increased complexity, including visa changes and recent anti-money-laundering reforms.

This has contributed to cooler demand from overseas buyers.

With some international property markets also experiencing declines, Melbourne may not look as attractive to overseas buyers as it has in the past.

Those already affected by interest rates

Many local buyers who have already been affected by higher interest rates are simply no longer looking.

Some may have planned to upgrade or purchase an investment property, but can no longer comfortably afford to do so.

Others are choosing to stay where they are and wait for greater certainty.

So, what does this mean for buyers?

A quieter market doesn’t necessarily mean that every property is a bargain.

In fact, it makes good due diligence even more important.

When there are fewer buyers competing, it can be tempting to focus solely on price. But the fundamentals of the property still matter – and perhaps matter even more when market conditions are uncertain.

Tale of two weekends – this year compared to last year:

Many more properties sold over the agent quote last year, more properties sold under the agent quote this year.

Properties tracked are houses, $1.5m plus, within the inner metropolitan Melbourne area.

Flood mapping is another piece of the puzzle

On another note of interest, Melbourne Water and local councils are rolling out updated flood mapping across parts of Melbourne.

The updated mapping is intended to identify areas that may be affected by flooding and help inform planning as Melbourne grows and weather patterns change.

For buyers considering a purchase, flood mapping is another important piece of due diligence.

As a buyer advocacy business with a practising architect, zoning, overlays and flood mapping are some of the first things we check when assessing a property for a client.

Buying in a flood-affected area is not necessarily a reason to walk away. However, the implications need to be understood and managed carefully.

Adam has worked with many clients on purchases and subsequent renovations where we have successfully navigated the challenges that particular overlays and planning requirements can present.

It’s all part of the service we offer at WoledgeHatt Buyer Advocates.

Ultimately, it’s about giving our clients peace of mind when they are considering one of the biggest financial and emotional investments they will make.

If you’re considering buying a home in Melbourne and would like to understand what the current market means for your particular situation, contact us for a confidential discussion.

Some of the better properties currently on the market; an architect’s view

‘Off-market’/Pre-market Properties:

Auction Spotlight:

13 Myrtle Road Hampton

A perfect spring day to gather in the north facing back yard of this traditional Californian Bungalow. The original home was extended a long time ago and well maintained by the owners of over 30 years. The home is certainly comfortable enough as is yet doesn’t really flow for today’s family lifestyle, so would benefit greatly from either a single level or 2nd storey renovation to redo the rear of the home. The block and position to amenities certainly support the investment.

The home had been quoted $1.69-1.79m at the start of the campaign, before being lifted to $1.75-1.85m with strong interest during opens. Once Steve Tickell from Belle Property had finished his preamble, it was pleasing to hear a genuine bid be placed to start off the auction. A second and third bidder quickly joined the action to bring the home onto the market at $1.85m. Bidder three dropped out just over $1.9m, while a fourth jumped in and pushed out #2 once things neared $2.1m. Bids went back and forth steadily, eventually bidder 1 was needing to think carefully on every bid, while #4 continued to come back swiftly, showing strength and confidence. This party was the eventual successful young family at $2.28m, who will hopefully see the home through the next few decades.

27a Leura Grove Hawthorn East