Fewer investors are bidding in Melbourne right now. For buyers who are still active, that is an opportunity. Prices have not collapsed, but the field of competition has thinned, and for investors with the right structure and finance in place, that thinner field is translating into something Melbourne has not seen in some time: actual negotiating power.
This article is general information only and does not constitute financial, legal or tax advice. We recommend seeking advice from a qualified accountant and solicitor before making any decisions.
Why is the market softening?
Since the 2026–27 federal Budget restricted negative gearing on established residential properties bought after 12 May 2026, a meaningful slice of the investor market has stepped back. Many investors who would have bought established properties are waiting to see how the rules settle, working through their own tax position or simply deciding the numbers no longer stack up the way they used to.
Treasury's own modelling expects the changes to soften house price growth by around 2%. That is not a crash, but it is enough to take some of the urgency out of the market, and urgency is exactly what has driven Melbourne prices in past cycles. Early indicators suggest investor activity in Victoria has shrunk. According to research firm and property platform FoundIt, Victoria lost more than 640 rental homes in May. This is interesting to note because investors are typically the buyers most willing to stretch on price at auction. With fewer of them in the room, that upward pressure eases.
The numbers reflect this. Melbourne's median dwelling value reached $808,486 at the end of June 2026, according to Cotality, down 1% from the previous month. That followed a 0.8% decline over May, which would have included some impact of the Budget announcements.
Clearance rates have declined, with the city seeing just 46.6% cleared in the week ending 28 June 2026. This was the third week in June to record a clearance rate below 50% in the worst run since Covid-era lockdowns.
These numbers suggest that the properties still selling are taking longer to find a buyer or are passing in more often. For a buyer who is ready to act, slower clearance rates usually mean more room to negotiate on price and conditions.
Fewer active investors means less competition at auction and less upward pressure on price. For buyers who are still in the market, that marks a shift in leverage.
The Budget changes are a filter, not a barrier
A lot of reporting around the Budget has portrayed the news as bad for property investors across the board. In reality, the impact on the market is more nuanced. The changes have created a filter, not a barrier. Investors who understand where the new rules still work in their favour are now competing against a smaller field for the same stock.
There are two options for entering the market that still make sense under the new settings, and Melbourne investors who get their structure and finance sorted before they start making offers are the ones positioned to take advantage.
Option one: New builds
Eligible new builds (see table below) retain full negative gearing under the Budget changes. While established properties bought after Budget night lose that ability from 1 July 2027, new builds keep it.
The capital gains tax (CGT) treatment is also more favourable for new builds. Where established property investors will be subject to a new inflation-based indexation system, new build investors get a choice between the existing 50% discount and the new system, whichever produces the better outcome when they sell.
When you stack that against a softer market with fewer investors bidding against you, new builds in Melbourne's growth corridors could look like a stronger proposition than they did a year ago.
Option two: Buying through a company structure
The Budget's negative gearing restrictions apply to individuals. They do not apply to companies. A company purchasing an established residential property is not subject to the same restrictions that now apply to individual buyers.
There is also a tax rate gap to factor in. The top marginal rate for individuals is 47%, including the Medicare levy. The standard company tax rate is 30%, and for base rate entities – broadly, companies with an aggregated annual turnover below $50 million and whose passive income does not exceed 80% of total assessable income – it is 25%.
Of course, this strategy doesn’t suit everyone and it requires careful advice from your accountant before you act. But for self-employed Melbourne investors and business owners already operating through a company (particularly those who were relying on negative gearing when buying in their own name), it is a structure that deserves a proper look in the current market.
Where the opportunity sits in Melbourne
Conditions like this tend to show up first in the areas that were most reliant on investor demand. Melbourne's strongest annual price gains in May 2026 came from the city's outer and fringe corridors, where relative affordability continues to draw buyers outward from the more expensive inner and middle rings. For instance, leading the gains in Greater Melbourne, Frankston saw 8.0% annual growth in May, followed by Sunbury at 7.7%, according to Cotality.
New property listings across Melbourne were around 15.1% higher than the same time in 2025, according to SQM Research, increasing the number of homes available to buyers and reducing competition between them. For buyers with their finance and structure sorted, that combination of thinning investor competition, softer inner-ring conditions and more stock on market can translate into genuine negotiating room.
Off-the-plan apartments and townhouses also benefit from the Victorian government's stamp duty concession, extended to 21 April 2027, which calculates duty on the dutiable value rather than the full contract price.
All of this points to potentially favourable conditions for investors, but none of it is permanent. As established property investors adjust to the new rules and confidence returns, competition will pick back up. The buyers acting now, with the right structure and the right finance, are the ones who will have secured ground before that happens.
Structure first, then make an offer
The mistake we see most often is buyers sorting their finance after they have found a property, rather than before. With both new builds and company structures, the lending can be more involved than a standard residential purchase, and getting it wrong – or getting it right too late – can cost you the property or cost you money.
Construction and off-the-plan finance work differently to a standard mortgage, with funds released in stages and settlement often a longer period away than buying an existing property.
Company borrowing requires lenders to assess the business itself, not just the individual, and not every lender on the market is active in this space.
At AXTON Finance, we work with a panel of more than 30 lenders and can help you get pre-approved in the right structure before you start making offers. In a market where negotiating power has shifted toward buyers, being ready to move quickly, with the right structure already in place, is key.
This article is general information only and does not constitute financial, legal or tax advice. We recommend seeking advice from a qualified accountant and solicitor before making any decisions.
Thinking about taking advantage of Melbourne's current market conditions? Speak to the team at AXTON Finance today on 03 9939 7576, email getabetterrate@axtonfinance.com.au or get in touch here.
