Melbourne Property Market – Prices, Trends, Forecast [March 2025]

The Melbourne property market showed signs of recovery in February 2025, marking a 0.4% increase in home values, ending a 10-month decline. This rise was primarily driven by higher-end properties, aligning with historical trends where premium markets respond more significantly to shifts in interest rates.

Melbourne Property Price Growth

Despite the monthly growth, Melbourne’s annual performance remains weak, with values down 3.2% over the year. The quarterly change also shows a -1.1% decline, suggesting that the market is still stabilizing. The median dwelling value in Melbourne now stands at $772,561.

CoreLogic Home Value Index

CoreLogic Home Value Index, Released on 3rd March 2025

Melbourne Property Market Trends

• Premium sector resurgence: Higher-end properties led the recovery, bouncing back from sharper declines.
• Reduced property listings: New listings were 4.7% lower than a year ago, creating some price support despite overall weaker demand.
• Auction market recovery: Melbourne’s auction clearance rates improved, reflecting growing buyer confidence as expectations of lower interest rates strengthen.
• Rental market slowdown: Rental growth has softened, with unit rental growth falling from 15.2% (2023 peak) to 3.2%, partly due to stabilizing migration and larger household formations.

Change in dwelling values over key time periods

Melbourne Property Market Forecast

• Interest rates remain key: Any rate cuts will likely enhance affordability and stimulate buyer demand.
• Affordability advantage: Melbourne’s market correction (-6.4% from peak levels) has made properties more accessible, possibly attracting more buyers.
• Supply-demand balance: While inventory is 3.9% above the five-year average, low new construction rates may support prices in 2025.

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:

• ANZ predicts a 5-6% increase in capital city property prices in 2024, with Brisbane expected to see the highest rise at 9-10%, Perth property values could go up by 1-11%, Sydney by 4-5%, and Melbourne prices by 2-3%.
• CBA forecasts a 5% rise in capital city prices, with some variations: Brisbane is anticipated to grow by 6%, Melbourne and Perth by 5%, Sydney by 4%, and Adelaide by 1%.
• NAB projects a 5.4% average increase across the capitals, with Brisbane expected to see a 6.5% rise, Perth and Adelaide by 6.2%, Melbourne by 5.5%, Sydney by 5%, and Hobart remaining flat.
• Westpac expects a 6% growth across the combined capitals, with Perth leading at 10%, followed by Brisbane at 8%, Sydney at 6%, Adelaide at 4%, and Melbourne at 3%

Oxford Economics recently released property forecasts predicting where house prices will be in three years.

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Conclusion for Homeowners

Melbourne’s property market is transitioning, with early signs of recovery led by high-value homes. While challenges persist, including weak annual growth and rental softening, lower interest rates and reduced supply may drive gradual market improvement throughout 2025.

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