Victoria’s unit market to surge in 2026 as prices outpace houses

4 weeks ago 17

Units surprise tip for big year in 2026 (artwork) - for herald sun real estate

Units have been tipped as a surprise growth market for 2026 after a booming finish to 2025.

Victoria’s unit market has been tipped for a 2026 surge after an end-of-year boom put their growth ahead of houses across much of the state in the final months of last year.

Real Estate Institute of Victoria data shows that from October to the end of December, 2025, the median price of Melbourne units rose 2 per cent to $656,500.

Houses gained 1.8 per cent in the same period.

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Units, which include apartments, townhouses, flats and villas, were up 5 per cent in regional Victoria, ending the year with the typical home selling for $461,000.

Houses notched a 1.2 per cent gain.

The data also shows that units performed better than houses in the city’s inner and middle rings, though were just behind in the city’s outer suburbs.

The best performing suburb for unit price growth in the time frame was Murrumbeena, where the median grew more than 50 per cent to $632,500. It was followed by Abbotsford, where a typical unit now costs $657,000 after a 34.1 per cent three-month surge.

201/41 Murrumbeena Rd, Murrumbeena - for herald sun real estate

201/41 Murrumbeena Rd, Murrumbeena, sold for the suburb’s exact $632,500 median unit price in December last year.

2/88 Trenerry Cres, Abbotsford - for herald sun real estate

This two-bedroom Abbotsford sold for $657,000 in October, the area’s typical price.

REIV chief executive Toby Balazs said the key factor was affordability and that it was likely units would continue to surge in the new year.

“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,” he 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.”

While there would be investors among those buying the units and pushing prices up, Mr Balazs said first-home buyers would have accounted for more sales as there were still issues with investor sentiment in Victoria over challenges with holding and managing such homes.

Cohen Handler buyer’s agent Nicole Jacobs said she was unsurprised that affordable properties, including units, were performing well.

2/86 McDonald St, Mordialloc - for herald sun real estate

2/86 McDonald St, Mordialloc, sold late last year for $850,000, in one of Melbourne’s top performing suburbs for units.

“And I absolutely think that will be a continuing trend in 2026,” Ms Jacobs said.

However, the professional homebuyer advised those thinking of buying a unit, townhouse or apartment to consider the decision carefully, as only certain ones were likely to attract ongoing price growth.

For first-home buyers, Ms Jacobs said one of the better moves was to look for a bigger, older style unit — even if that meant looking further out, as you were likely to live in it for longer and minimising the risk of multiple expensive stamp duty tax payments.

Beyond this, she said older-style apartments in Toorak were still often quite affordable and were typically quite large and solid.

For those looking for a ground-level unit, she said while major growth appeared to have been recorded in some areas, it might be better to look at the next suburb over.

2/27 Crisp St, Hampton - for herald sun real estate

This three-bedroom Hampton home at 2/27 Crisp St sold for $1.306m recently.

38A Scotch Pde, Bonbeach - for herald sun real estate

38A Scotch Pde, Bonbeach, sold for $890,000 in December, with the three-bedroom unit giving an idea what your money buys in the suburb.

Such as Highett or Cheltenham, instead of places like Hampton that had done well at the end of 2025.

A strong year for units could also be good news for the Victorian government, which is hoping to increase the supply of homes in established suburbs — a plan that has run into difficulty due to high building costs.

Mr Balazs said with rising prices for established units helping close the gap to the cost of building a new one, it 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,” Mr Balazs said.

“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.”

3/5 Glencairn Ave, Camberwell - for herald sun real estate

A $1.135m budget would have got you this two-bedroom villa at 3/5 Glencairn Ave, Camberwell, late last year, after significant price increases in the area.

However, Urban Development Institute of Australia Victorian policy director Jack Vaughan said rising prices weren’t the only thing needed to get the sector up and running.

“The industry does still find themselves in very challenged conditions, it is still incredibly difficult to get projects to stack up,” Mr 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 were currently disincentivising development or making producing homes more expensive.