Melbourne property market data, trends, forecasts

Melbourne property market news

After a historic boom in 2021 which saw median Melbourne property prices surge by more than +17 per cent, it's been a rocky few years for the Melbourne property market. According to CoreLogic data, 2024 saw the city's median property value drop -3.0 per cent, falling below markets like Brisbane, Perth and Adelaide. Things have taken a turn in 2025, though, and Melbourne property prices are comfortably on the up. 

Melbourne property prices - May 2025

Much of Melbourne's property woes have been caused by the lingering effects of extended Covid lockdowns, the pressures of high interest rates, weakening investor activity, and slowing migration patterns compared to other cities. That's left the median Melbourne home price notably lower than its March 2022 peak, but the February and May 2025 interest rate cuts have sparked some fresh upward momentum. 

New listings in May 2025 were down -7.0 per cent on the same month in 2024, while total listings were down -4.8 per cent, suggesting that seller activity is slightly down but buyers are more eagerly absorbing what stock is available. Melbourne's median days on market (DOM) has eased right back down to 36 days, down from 51 in February. Sales volumes are up +6.2 per cent year on year, so buyers are proving more active than they were in 2024. 

Melbourne house prices

The house-led boom of 2021 saw Melbourne house prices shoot up to record highs before hitting their peak in February 2022 and then falling over the following 12 months. Solid growth was returning since that point until a slowdown in the latter stages of 2023 and throughout 2024. 2025 has brought some positive news for sellers, though. 

Melbourne house prices - May 2025

Melbourne's median house price bounced back by another +0.5 per cent in May to sit at just under $940,000. Quarterly movement has shifted into the positive too at +1.2 per cent, while annual growth now sits at a significantly reduced -1.0 per cent. We will now wait to see whether any further price growth can return as lower interest rates restore some positive sentiment and stimulate the market.

Top 5 Melbourne suburbs for first home buyers - houses

While Melbourne remains more affordable than Sydney, finding reasonably priced housing to suit first home buyers can be tricky. Here are a few of our top selections for Melbourne suburbs where you can still pick up a house below the city's median price. 

Top Melbourne suburbs under $950,000 house price

Melbourne unit prices

While house prices surged in 2021, Melbourne's median unit price increased at a softer rate as buyers followed a 'race for space' mentality and looked for larger homes or regional escapes. The positive is that Melbourne unit owners since experienced smaller drops in value as the downturn unfolded, and unit prices held strong throughout most of 2023. They're now closely matching houses in the current market as prices begin to climb once more.

Melbourne unit prices - May 2025

The median unit price in Melbourne lifted by +0.4 per cent in May to sit just under $615,000. Over the past three months, prices are up by +1.2 per cent, while annual growth sits in marginally negative territory at -1.6 per cent.

An increase in demand for units due to upcoming immigration and renewed interest from first home buyers looking for a cheaper alternative could continue to support unit prices in 2025. 

Top 5 Melbourne suburbs for first home buyers - units

Units offer better affordability for first home buyers in Melbourne, although median prices are still substantial. Here are some of our top picks for Melbourne suburbs where you can buy below the median unit price. 

Top Melbourne suburbs under $600,000 unit price

Melbourne property market forecast 2025

2024 was a year of two halves. Prices held steady in the first six months of the year before easing off later on and drifting further downwards. So what are the big banks saying about what to expect in the year ahead?

NAB's latest Melbourne house price forecast has improved slightly, projecting Victorian capital dwellings gaining +2.3 per cent over the course of 2025.

Westpac's Melbourne real estate forecast is equally cautious, with prices now expected to end 2025 up by +2.0 per cent.

Big banks' Melbourne home price forecasts 2025

Whether or not this slight recovery can be achieved still largely depends on the supply and demand dynamic over the next year. Interest rates had extensive impacts on the market, but the two cuts we've seen so far in 2025 have already had a strong rebounding effect for Melbourne.

Currently, the RBA sits at 3.85 per cent, a long way up from the emergency-level 0.1 per cent rate borrowers were enjoying until May 2022 but, thankfully, beginning to head down from the 4.35 per cent peak. The banks expect there will be no further hikes, with rate cuts to continue through 2025.

Big banks' cash rate forecast 2025

• CBA: Peak of 4.35% in November 2023, then dropping to 3.35% by December 2025
• Westpac: Peak of 4.35% in November 2023, then dropping to 3.35% by December 2025
• NAB: Peak of 4.35% in November 2023, then dropping to 3.10% by February 2026
• ANZ: Peak of 4.35% in November 2023, then dropping to 3.35% by August 2025

Melbourne house prices outperformed units throughout the 2023 rebound, though that dynamic has been shifting. Units and more affordable houses could now be well-placed to deliver stronger gains into 2025.

Units and entry-level houses are expected to appeal further to incoming investors and first home buyers as immigration has ramped up significantly, bringing additional demand to the rental market in particular.

What are industry experts saying?

Michael Yardney - Director of Metropole Property Strategists

"Over the last four decades, Melbourne has been Australia’s strongest performing housing market; however, over the last couple of years, it has underperformed.

In fact, over the last 12 months dwelling prices have been basically stagnant, while many other capital cities enjoyed double-digit capital growth.

Melbourne's property values have risen 8.4% since the onset of Covid, but are still -6.4% below their peak of March 2022 and they fell -0.7% in December.

However, market sentiment has improved now that interest rates have started to move lower and Melbourne house prices rebounded in the last weeks of February, reversing the soft trends over the last few months."

Eliza Owen - Head of Research at CoreLogic

"I think people are recognising it’s a good time to buy in Melbourne as this market has become more affordable, sitting about 6 per cent below its peak in 2022.

There is that initial sugar rush of that cash rate cut … even though we’ve seen a strong inflection point and a boost to consumer sentiment, there are questions about how long it can last, especially if we don’t see another rate cut in April."

Melbourne house prices graphs and charts

The latest chart pack from CoreLogic clearly demonstrates the rapid acceleration and subsequent deceleration of the Melbourne property market over the past two years. The worm turned once more in 2023 but fell back towards flatter levels moving into 2024. Now, in 2025, the graph is beginning to show a far more positive outlook.

The upturn during the 2021 boom was one of the most aggressive and significant periods of growth in Australian history. The downturn that's followed has also proved to be a historic one, though, but growth came back with strength in 2023. 

Zooming out and looking at the wider context over the past 30 years, though, prices in Melbourne have seen incredibly strong increases. The below chart shows Melbourne house prices soaring well beyond every capital city save for Sydney, particularly since around 2013.

When taken into the perspective of even the past few years, Melbourne homeowners have experienced huge gains to the value of their properties.

Selling Melbourne property

According to Domain's latest figures, auction clearance rates in Melbourne on the rise and may be now slightly favouring sellers. Melbourne Days On Market (DOM) has dipped lower, back towards the national average, and sales volumes are on the rise.

Melbourne property investment

The Melbourne property market has been turbulent for investors throughout the pandemic, however prices have lowered, rental vacancies are still around record lows, and asking rents continue to surge with further demand expected due to increased immigration. Considering these factors, it could be a positive time for Melbourne property investors. Many have already opted out of the market, though, as high mortgage commitments create pressure.

Top 5 suburbs for Melbourne investors

The latest BuyersBuyers Investor Special Report detailed some of the top suburbs where Melbourne investors could find strong future potential. 

The report explains that "prior to the pandemic, Melbourne had become a global city, and its population growth was the strongest in Australia due to strong immigration. 

"This trend is likely to resume in 2023, and Melbourne is expected to be the largest capital city of Australia over the coming decade."

Top suburbs for investors to buy units in Melbourne

The report noted that "family-suitable apartments in small unit blocks in popular areas, where houses are out of reach, have also delivered solid capital growth and a healthy rental return," adding that "units have underperformed houses significantly in Melbourne over the past decade, and there are some opportunities for contrarian investors to pick up a bargain."

Looking to invest in Melbourne property? 

• Check out our list of best suburbs to invest in Melbourne for 2024
• Get stuck into some expert advice on where to find the top 10 suburb picks for Australian investors
• Discover the Melbourne suburbs with the highest rental yield
• On a budget? Here are the top 10 cheapest suburbs to buy in Melbourne