Strength at the top

With supply tightening and population growth intensifying competition, the most coveted addresses are only getting harder to secure. For buyers at the top end of the market, 2026 could be a defining year—by Kirsten Craze.

Australia’s prime residential market entered 2026 in a position of quiet strength. After two years shaped by interest rate uncertainty and shifting buyer sentiment, the underlying fundamentals have reasserted themselves—and for those buying at the top of the market, the picture is increasingly compelling.

The market is moving at two speeds. Perth, Brisbane, Adelaide and Hobart are posting clear upward momentum, while Sydney and Melbourne—the traditional anchors of Australian prestige property—are building steadily, with vendor confidence returning. New listings rose 12 per cent in Melbourne and 9.7 per cent in Sydney against the long-term February average, suggesting growing confidence among owners of luxury homes.

Beneath the monthly data sits a structural story. According to recent data from the Centre for Population, Australia’s population is on course to reach 28 million this year, while Melbourne is forecast to become the nation’s most populous city, reaching 9.1 million inhabitants by the 2060s. For buyers thinking on a generational horizon—whether acquiring a principal residence, a considered addition to a portfolio, or a home that will be passed down— these are not incidental figures. They speak to the enduring scarcity of the right address in the right city.

THE ADDRESS ADVANTAGE

Price growth is regaining speed, and doing so most visibly in the markets where lifestyle is the primary
currency. Coastal enclaves, established inner suburbs and amenity-rich urban precincts are all recording renewed interest from buyers who know exactly what they want and are prepared to move when it appears.

Mark Browning, head of valuations at NAB says high net worth buyers are active so far this year, seeking out grand family homes. “Once everyone came back from their summer break, we saw continued activity and interest in the $10m-plus and even $20m-plus space,” he says. “For the right property, people are ready to transact and make decisions. Where it does differ is in the $3-$5m bracket; that’s where we’re witnessing a little more caution from buyers.”

Browning says that vigilance is likely related to share market volatility and the current interest rate environment. “The outlook for further rate movements this year will always impact that end of the market.” He continues: “It’s taken a little time for people to digest and think it through, but by now most buyers would have recalibrated their thinking and be preparing to move forward.” Scott Patterson, executive director at Kay & Burton specialising in the Boroondara area, says the market began the year in full swing after a brief spell of buyer fatigue at the end of 2025. “For us, it’s business as usual. We’ve had a pretty resilient marketplace because of the proximity to private schools, and there’s still a fair bit of activity from Asian buyers looking to purchase in areas like Canterbury,” he says. “Many buyers are still a little hesitant unless they see good value. There is some price sensitivity but if a property is correctly priced, well presented and well marketed, there’s strong demand.”

Although buyers are treading more cautiously, Patterson says vendors are standing their ground. “That gap between vendor expectations and willing buyers—and there is still a bit of a gap—is slowly closing.”

TURNKEY TREND CONTINUES

In a market shaped by rising construction costs and stretched timelines, the appetite for turnkey homes shows no sign of slowing, with competition for completed properties driving premiums across Melbourne. “Probably the most in-demand segment of the market right now would be brand new, near-new, or homes with quality renovations,” Patterson says.

Gowan Stubbings, executive director at Kay & Burton focusing on Stonnington, agrees that renovated properties command the deepest buyer pool. “Homes that are completely finished have the best following and they’re the ones that will achieve a premium. When they’re presented at their best, buyers fall in love and have that emotional connection,” he explains. “Over recent years, we’ve seen the cost of wages and materials go up considerably, so people are more cautious about unrenovated property.”

In the Bayside market, the picture is slightly different. Alex Schiavo, executive director at Kay & Burton specialising in the area, says that while turnkey family homes attract strong demand, properties on large land parcels and period homes still have a strong following. “A contemporary home with a tennis court is incredibly well sought after, but there are also areas like Hawthorn, Canterbury and Kew where people really do love period homes. In the beachside suburbs, however, you’ll often find people prefer contemporary.”

MELBOURNE’S VALUE PROPOSITION

Once the second most expensive capital in Australia, Melbourne slipped down the median price ladder after the pandemic, compounded by a series of state government policies that had investors turning their attention interstate. Cotality figures for the 12 months to February show that Melbourne now has the sixth highest median dwelling value in the country at $826,132, sitting behind Sydney, Brisbane, Perth, Adelaide and Canberra. For buyers at the top of the market, that position represents enviable value relative to other major cities. “Everyone’s talking about Melbourne prices having been quite subdued for the last few years, so there really is a perception that there’s good value here,” says Patterson. “For the first time in over 20 years, we’re starting to see buyers coming down from Sydney. The cost of living and investing there is becoming difficult, and Melbourne is increasingly being considered as an alternative.” Schiavo adds that Melbourne prices have plenty of room to grow. “Some pockets of Melbourne are still greatly undervalued, there’s no question about that. If I look at the Bayside area, there’s incredible value compared to some other suburbs or regions. There are still very good opportunities for buyers,” he says.