Victoria’s unit market is poised for a strong 2026 after an end‑of‑year surge saw unit prices outpace houses across much of the state.
Real Estate Institute of Victoria (REIV) data cited by the Herald Sun shows that from October to the end of December 2025, the median price of Melbourne units rose 2% to $656,500, compared to a 1.8% gain for houses over the same period.
In regional Victoria, units – including apartments, townhouses, flats and villas – jumped 5% to a median of $461,000, while houses rose just 1.2%.
Units also outperformed houses in Melbourne’s inner and middle rings, with houses only slightly ahead in the outer suburbs.
The standout suburb was Murrumbeena, where the unit median surged more than 50% to $632,500. It was followed by Abbotsford, where a typical unit now costs $657,000 after a 34.1% three‑month jump. Other strong performers included Bonbeach, Moonee Ponds, Bentleigh, Mordialloc, Box Hill, Camberwell, Kew and Hampton.
REIV chief executive Toby Balazs (pictured) said affordability was the key driver, and that unit demand was likely to remain strong in 2026.
“I think with affordability still being something that is certainly on the radar of Victorian property buyers, being able to get on the property ladder is probably more likely to come from medium-density,” Balazs said.
“And I don’t see why this trend wouldn’t continue. It does point to a structural shift in the acceptance of apartment living.”
Balazs said first‑home buyers were likely behind a large share of recent unit purchases, with some investors also returning, although he noted lingering concerns about holding and managing investment properties in Victoria.
Buyer’s agent Nicole Jacobs from Cohen Handler said it was no surprise that more affordable stock – including units – was leading the market.
“And I absolutely think that will be a continuing trend in 2026,” she said.
Jacobs urged buyers to be selective, warning that not all units, townhouses or apartments would deliver the same long‑term growth.
For first‑home buyers, she said one of the better strategies was to target bigger, older‑style units, even if that meant moving further out. These properties were often more liveable for longer, reducing the risk of multiple expensive stamp duty bills.
She added that older‑style apartments in Toorak remained relatively affordable given their size and solidity, and suggested buyers consider neighbouring suburbs such as Highett or Cheltenham rather than only chasing recent high performers like Hampton.
A strong year for units could support the Victorian government’s push to increase housing supply in established suburbs, a plan that has been hampered by high construction costs.
Over the past two years, the state has rolled out a wave of pro‑density planning reforms – including fast‑tracked townhouse codes, blanket rezoning around many train and tram stations, and shorter approval timeframes – aimed at allowing thousands of new medium‑density homes in well‑located suburbs, The Guardian reported.
Balazs said rising prices for established units were helping close the gap to the cost of building new stock, which could be an early positive for developers.
“It shows there’s growing acceptance of the inner-city being desirable, and you would think it would give confidence in the medium-density housing supply providers to be more bullish about providing more supply,” he told The Herald Sun.
“So anything we can do at the government levels to support more housing supply will be welcomed and the market seems to be responding well.”
However, Urban Development Institute of Australia (Victoria) policy director Jack Vaughan said price growth alone would not be enough to restart stalled projects.
“The industry does still find themselves in very challenged conditions, it is still incredibly difficult to get projects to stack up,” Vaughan said.
“We can’t rely on the value of homes increasing. To make projects more viable, the government need to do some heavy lifting in reducing the cost of providing new medium-density to the market.”
He said this included addressing a range of tax settings that are currently discouraging medium‑density development or pushing up delivery costs.
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