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Home › Property Market Update › Melbourne, VIC
Melbourne’s housing market showed a modest lift through September 2025, with dwelling values up 0.5% for the month. The city’s median home value now sits at $805,880, supported by renewed buyer demand as interest rates eased and confidence improved. However, compared with faster-moving capitals like Perth or Brisbane, Melbourne’s growth has been relatively restrained.
See how Melbourne’s property values have performed across houses and units over various timeframes, along with returns, yields, and median prices.
Watch CoreLogic’s September 2025 Housing Market Update for expert commentary on national and capital city housing trends, price movements, and key market drivers across Melbourne.
Table of Contents
Over the September quarter, Melbourne recorded a 1.0% rise in dwelling values, while annual growth was 1.9%. Across the past five years, cumulative gains reached 17.5%, one of the weaker results among the capitals. Since the February 2025 rate cut, values have climbed by 2.9%. Houses grew faster than units on an annual basis, with house prices up 2.5% compared to just 0.2% for units. Some outer and middle-ring suburbs, such as Frankston and Tullamarine–Broadmeadows, stood out with stronger annual growth above 6–9%.
CoreLogic Home Value Index, Released on 1st October 2025
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Listings remain tight relative to historical averages, providing some support for prices. Auction activity has been steady, though clearance rates in Melbourne sit below Sydney’s stronger results, reflecting the city’s slower momentum. Rental conditions are comparatively softer, with Melbourne rents rising just 0.8% in the September quarter, the mildest increase among the capitals. Gross rental yields average 3.7%—a little higher than Sydney, but still low compared with Perth or Darwin.
Affordability continues to weigh on Melbourne’s market. While not as extreme as Sydney, household income-to-value ratios remain stretched, limiting borrowing capacity at the top end. This is keeping demand concentrated in more affordable or family-oriented areas, where growth is outpacing the broader city.
The table outlines CoreLogic’s Home Value Index as of 1st September 2025, showing peak declines, five-year growth, and changes since the first rate cut in February.
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Looking ahead, Melbourne is expected to see moderate growth through spring and summer. Lower interest rates, rising wages, and government incentives such as the expanded Home Deposit Guarantee will underpin demand. However, given its higher exposure to affordability pressures and a slower rebound compared with other capitals, Melbourne is unlikely to lead national growth. Instead, gains are expected to be steady, with activity focused in the middle-value and outer-suburban markets.
The Reserve Bank of Australia’s ongoing adjustments to interest rates will likely play a crucial role in shaping market dynamics, as higher borrowing costs limit purchasing power for many buyers.
Here are some of the most recent forecasts by the big-4 banks in Australia:
Oxford Economics recently released property forecasts predicting where house prices will be in three years.
Melbourne’s housing market is improving but remains measured. Dwelling values are rising again, but at a slower pace than the stronger-performing capitals. Limited supply and supportive lending conditions provide a floor under prices, while affordability caps growth at the upper end. With steady demand and renewed confidence, Melbourne is positioned for continued but modest gains, offering stability rather than rapid acceleration.
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