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

Melbourne’s property market continues its measured rebound, posting a slight quarterly rise but still trailing the other capitals over the year. Affordability remains a key advantage, with the city offering lower prices than Sydney but showing slower growth. While rents are stabilising and yields are modest, tight supply and falling interest rates could offer gentle upward pressure in the months ahead. Buyers focused on value and lower-risk conditions may find Melbourne an appealing, if steady, option.

Market Highlights

• Melbourne’s housing market is in a gentle recovery phase, recording a 1.1% rise in Q2 but still showing a -0.4% annual decline—the weakest among major capitals. Prices remain 3.9% below the March 2022 peak, underscoring its ongoing rebound.
• With a median dwelling value of $796,952, Melbourne offers more affordability than Sydney but lags in growth. Rental conditions are subdued, with house rents up just 0.7% and units 1.8% year-on-year. Gross yields sit at 3.7%.
• Frankston (4.3%) leads annual suburb growth, followed by modest gains in Tullamarine-Broadmeadows and Knox.
• Looking ahead, falling interest rates and tight housing supply could support gradual gains, but high debt levels and weak momentum limit the potential for rapid surges. Melbourne remains a steady, lower-risk market for buyers prioritizing affordability and stability.

Housing Metrics Overview

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 monthly Housing Market Update for expert commentary on national and capital city housing trends, price movements, and key market drivers across Melbourne.

Melbourne Property Price Growth

Over the June quarter, Melbourne saw dwelling values increase by 1.1%, with monthly growth of 0.5% in June alone. This performance matches the quarterly gain in Sydney and Adelaide, yet trails faster-rising cities like Brisbane and Perth.

However, Melbourne remains the only capital city (aside from Hobart) to show a negative annual change, with values down -0.4% over the 12 months to June. Since its last market peak in March 2022, values are still 3.9% below those levels, indicating an ongoing recovery phase.

Among Melbourne’s top-performing suburbs, Frankston led with a 4.3% annual increase, followed by Tullamarine-Broadmeadows and Knox, both registering solid but modest value gains.

View the latest property value movements across Australia’s capital cities. Use the filters to explore monthly, quarterly, and annual changes by dwelling type and region. Data sourced from CoreLogic.

CoreLogic Home Value Index, Released on 1st July 2025

Melbourne Property Market Trends

Rental trends in Melbourne have softened significantly:

• Annual rent growth for houses is the lowest among the capitals, at just 0.7%.
• For units, annual growth is similarly weak at 1.8%, again among the softest nationally.
• Gross rental yields sit at 3.7%, which is slightly below the national average but higher than Sydney’s return.

This rental stagnation reflects subdued rental demand growth, reduced net overseas migration, and constraints on affordability. At the same time, vacancy rates remain tight, implying that affordability—not oversupply—is capping rental inflation.

In terms of long-term capital performance, Melbourne has posted 14.3% growth over five years, and 40.6% over the past decade, both lagging most other capitals.

Dwelling value growth over the past 5 and 10 years, including combined capital and regional market performance.

Melbourne Property Market Forecast

Melbourne’s housing outlook is shaped by a mix of supportive and limiting forces:

• Interest rates are expected to fall further, potentially reaching 2.9% by early 2026. This is likely to bolster sentiment and increase borrowing power.
• Inflation has dropped to 2.4%, back within the RBA’s target, prompting forecasts of rate cuts starting July 8.
• Supply remains tight, with low levels of new dwelling approvals. This is expected to place upward pressure on values despite affordability barriers.

That said, Melbourne is also particularly exposed to risks. These include high household debt levels, lending caution, and weaker price momentum compared to peer cities. The city’s housing values will likely benefit from the national uptrend, but major surges are unlikely given these counterweights.

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 gently rising on the back of improved national housing sentiment and lower interest rates. However, it remains one of the more restrained capitals, with limited annual growth and persistent recovery from its 2022 peak.

The fundamentals suggest a market in stabilisation mode. Expect gradual improvement, rather than dramatic gains, in the months ahead—especially if affordability constraints ease and rates continue to fall. For buyers and investors alike, Melbourne may present steady, lower-risk opportunities rather than aggressive capital growth.

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