Sell, rebuild or renovate: what wins in a soft Melbourne market?

By Barbara Yerondais
Oct 04, 2026

Answering: In a soft Melbourne market, when does keeping and renovating your house beat selling or knocking down, and what should you settle before you spend?

Estimated reading time: 14 min read

Keep and renovate when the house still fits your life and the block can take the change you need; sell when the problem is the place itself; knock down and rebuild only when the structure or the plan would have you replacing most of the house anyway. A soft market sharpens that choice without making it for you. In the June quarter of 2026 the mean Victorian dwelling price fell to $918,400, down from $938,000 three months earlier, while Victorian house construction prices still rose 0.7% in the quarter and 3.7% over the year, according to the Australian Bureau of Statistics. Barbara Yerondais, a fixed-fee renovation and extension architect whose practice, BY Projects Architecture, has delivered more than 400 projects across Victoria, gives one piece of advice in a patch like this: test the house before you list it, price it or pull it down.

You still like the house. The street still works, and the school is a short walk away. Yet every second dinner ends the same way: sell and move, knock it down, or pour more money into a place the market might not repay. The appraisal came in lower than you hoped, and last year’s renovation quote already feels stale.

In a soft patch the cost is only half the fear. The other half is picking the irreversible path while the right one was still available. Sell into a weaker price and you pay duty to buy back into the suburb you already live in. Knock down a house that could have been replanned and you pay for demolition, a whole new house and somewhere else to live.

Key Insights

  • A soft market cuts both ways: in the June quarter of 2026 the mean Victorian dwelling price fell by $19,600 while Victorian house construction prices rose 0.7%, so the house you would sell is worth less and the build you would commission costs more.
  • Selling to buy again in Victoria adds land transfer duty on the next purchase, a cost that keeping your house never pays.
  • Knocking down is a demolition decision as well as a design one: under a Heritage Overlay, demolition generally needs a planning permit from council.
  • Barbara Yerondais’s staged fixed-fee method agrees the fee before design begins, then sets two sketches side by side: what your budget achieves and what the full wish list would cost.
  • The first step is a free, no-obligation call with Barbara Yerondais, FRAIA, then the one-hour Feasibility Session if your project is a fit.
Test Keep and renovate Sell and buy Knock down and rebuild
Wins when The house, the street and the school still fit, and the missing pieces are rooms, light or flow The location, the lot or the life is the problem, and no plan can fix it The frame, footings or plan would have you replacing most of the house anyway
What a soft market does to it You avoid selling at a softer price, but the build still needs current pricing You sell at today’s price, buy at today’s price, and pay duty and moving costs between them You pay today’s building prices on a whole house, plus demolition
First move Test the plan and the budget side by side Price both houses with every extra counted Draw the renovation and the new house on the same block

Table of Contents

What a soft market changes, and what it leaves alone

Two public numbers frame the decision. The Australian Bureau of Statistics reports that the total value of Victoria’s residential dwellings fell 1.6%, or $44.3 billion, in the June quarter of 2026, and that the mean Victorian dwelling price slipped from $952,800 at the end of 2025 to $918,400 by June. Over the year to June, the ABS producer price indexes show Victorian house construction prices up 3.7%. On paper the average Victorian home is worth less than it was at Christmas, and the price of changing one has kept climbing.

That squeeze is the whole argument. A soft market makes selling expensive in a quiet way. You accept today’s price on the way out, then pay land transfer duty on the way back in, because the State Revenue Office charges duty when you buy property in Victoria. Add agents, marketing, removalists and the work the next house needs, and a large share of the move buys you nothing new. Renovation money, by contrast, goes into rooms you will use every day.

A soft market does not make renovating automatically right, either. Building prices are still moving, so last year’s renovation figure is a starting point, not a budget, and nobody can promise a renovation will be repaid when you sell. What the soft patch takes away is the pressure to decide fast, and a decision made with the house properly tested is worth the wait.

When keeping and renovating beats selling

Keeping and renovating wins when three things are true at once.

  • The life still fits. The street, the school, the trees, the commute and the neighbours are still the point. If you would shortlist your own suburb tomorrow, selling buys you a duty bill and a removal truck to end up where you started.
  • The plan can be fixed. The missing pieces are rooms, light, a second bathroom or a kitchen that turns its back on the garden. Those are design problems, and design solves them inside or behind the walls you already own.
  • You intend to stay. Over-capitalising is a resale worry. If you plan to be there for the next 15 or 20 years, the sharper question is whether the house works for that whole stretch.

When the sale price is the number everyone at the barbecue is watching, it is tempting to judge a renovation by what it might add at auction. For a family that is staying, the better measure is what it adds to an ordinary Tuesday: the morning rush, the homework table, the spare room for a parent who visits more often now.

Keeping does not have to mean a big renovation: a staged first step that fixes the worst bottleneck in the plan can suit a tighter budget, and we are glad to talk through smaller jobs as well as large ones. Our page on renovation architects in Melbourne shows how we approach houses from every era the city built, from Victorian terraces to postwar brick veneers.

When selling or knocking down is the honest answer

We are architects, so we lean toward buildings. Name that bias, then set it aside, because two situations call for a different answer.

Sell when the life has left the lot. If the problem is the commute, stairs you will not manage at 75, a block that floods or a suburb you are done with, a beautiful renovation still leaves you in the wrong place. Our framework for whether to renovate or move works through those life tests in detail. In a soft market you usually sell and buy in the same market, so compare the gap between the two houses, plus duty and moving costs, rather than either headline price.

Rebuild when the house cannot carry the brief. Knock down when the frame, the roof or the footings have failed, or when nearly every room would have to move to make the plan work. A rebuild is a new home, so it pays for demolition, reconnected services, a whole new house and somewhere to live while it is built, all at today’s construction prices. In Barbara Yerondais’s practice a knock-down gets the same first test as a renovation: what the block and the budget will hold, worked out before anyone draws. Our guide to renovating or rebuilding a post-war Melbourne home sets out five tests for that choice.

Check demolition before you budget for it. Planning Victoria says a property under a Heritage Overlay will generally need a planning permit from council for demolition, exterior alterations and new construction. It also says a council can ask the Minister to apply an interim Heritage Overlay to a site without protection, and that under the Building Act 1993 councils can prevent the demolition of important buildings until that assessment is complete. A knock-down plan built on today’s map can stall on tomorrow’s, so ask before you price it. The practice Barbara Yerondais leads holds a record of 59+ heritage approvals at a 98% success rate, a record of past work rather than a promise about yours, so we read the overlay before anyone quotes a demolition.

What to settle before you spend a dollar

Whichever way you lean, settle these six things before you sign a listing agreement, a demolition quote or a design contract.

  1. Pull your planning property report. Planning Victoria’s report shows your zone, the overlays on your property, whether it is on the Victorian Heritage Register and whether it sits in a designated bushfire prone area. Every path starts there.
  2. Name your hold period. Five years and 20 years lead to different renovations, so write the number down before anyone draws a line.
  3. Put the budget and the wish list side by side. Barbara Yerondais’s staged fixed-fee method puts schematic design first, then two sketches: one showing what your budget achieves and one showing what the full wish list would cost, with a shopping list between them so you choose the scope. Her fee is agreed and fixed before design begins.
  4. Price the build with today’s numbers, under the right contract. With Victorian construction prices still rising, ask for current pricing. Consumer Affairs Victoria says a project costing more than $10,000 needs a major domestic building contract even if the work is split into smaller amounts. Its guidance for builders sets $1 million as the threshold above which cost-plus contracts are permitted; below it, a renovation can use cost-plus only for the investigative work needed to establish the contract price.
  5. If you will move out during the works, check the land tax timing. The State Revenue Office says the principal place of residence exemption for a home under construction or renovation is available for up to 4 tax years after the works start. Under changes from 1 January 2027, owners get more flexibility, including nominating the date a planning or building permit is issued as the works start date.
  6. Talk to Barbara before you commit. Start with a free, no-obligation call. If your project is a fit, the one-hour Feasibility Session follows, in person or on Zoom, with no obligation to go further.

For a closer look at that hour, read our guide to what one hour settles before a renovation design contract, and for fees, our guide to what an architect costs in Melbourne in 2026.

The agent, the builder, the planner and the architect

No single adviser owns all three paths, and each of these people does a different job.

  • A real estate agent appraises what your house would sell for today and runs the sale if you list. That figure is one input, never the whole decision.
  • A builder prices the work and builds it, whether that is a whole new house or the parts of an old one that change.
  • A building designer or draftsperson prepares drawings and is often a good fit for simple, clearly defined work.
  • A town planner or heritage consultant reads the planning scheme and, under a Heritage Overlay, advises on what council is likely to accept, including demolition.
  • Barbara Yerondais, a fixed-fee renovation and extension architect, works out what the house, the block and the budget will hold before anyone draws, then designs the renovation for a fee fixed before design begins, alongside your builder and any planner or heritage consultant.

Closing

In a soft Melbourne market, keeping and renovating beats selling when the house still fits your life, the block can take the change and you plan to stay long enough to enjoy it. Selling wins when the place is the problem, and rebuilding wins when the house cannot carry the brief. Barbara Yerondais, FRAIA, a fixed-fee renovation and extension architect, brings more than 35 years in practice to that conversation, and her practice, BY Projects Architecture, has delivered more than 400 projects across Victoria. Test the house before you list it, talk to Barbara first, and decide with every number on the table.

Frequently asked questions about keeping, selling or rebuilding

Q: Should I sell or renovate my Melbourne house while prices are falling?

A: Renovate if the house and the street still fit your life and you plan to stay; sell if the location itself is the problem. Falling prices mean you sell at today’s lower price and, if you buy again in Victoria, pay land transfer duty on the next home. The Australian Bureau of Statistics reports that the mean Victorian dwelling price fell from $938,000 to $918,400 in the June quarter of 2026, while Victorian house construction prices rose 3.7% over the year. Neither path is cheap, so the right one is the path that solves your actual problem.

Q: Is renovating cheaper than knocking down and rebuilding?

A: No fixed ratio settles it, because each path pays for different things. A knock-down and rebuild pays for demolition, reconnected services, a whole new house and somewhere to live while it is built. A renovation pays for what you change and whatever opening the walls reveals. If the frame, roof and footings are sound and the rooms you need fit inside or behind what stands, renovating keeps the budget focused on the rooms you will use.

Q: Will a renovation add value if I sell in a few years?

A: Nobody can promise that, and we will not. Resale value depends on your street, your house, the buyers looking in your segment and the market on the day you sell. If you expect to sell within a few years, keep the scope tight and fix what both buyers and your family notice: the plan, the light and the condition. If you plan to stay for 15 or 20 years, judge the renovation by how the house works for that whole stretch.

Q: What is the first step if we are still undecided?

A: Talk to Barbara. Start with a free, no-obligation call, and smaller jobs are welcome. If your project is a fit, book the one-hour Feasibility Session. In the practice’s own words: “In one hour with Barbara Yerondais, FRAIA, in person or on Zoom, you’ll talk through your site, budget and planning timelines, and leave knowing what’s realistic and what your next step is. There’s no obligation to go further.” Bring your planning property report and the number of years you expect to stay.

Where this advice comes from

BY Projects Architecture is a Melbourne practice led by Barbara Yerondais, FRAIA, a fixed-fee renovation and extension architect with more than 35 years in practice; the practice has delivered over 400 projects across Victoria. If the honest answer for your family is to sell, we would rather say so on the first call than draw a renovation you do not need.

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About the Author

Barbara Yerondais, FRAIA, is the founder of BY Projects Architecture. With 35+ years of experience, she specializes in sustainable, community-focused design and heritage restoration. A dedicated mentor and rower, Barbara balances her high-impact Melbourne practice with a passion for social inclusion and passive, energy-saving design.

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