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Yes, the analysis of Melbourne's property market is included in our pack
Melbourne's property market in 2025 presents compelling investment opportunities across various suburbs with strong rental yields and promising capital growth prospects.
The Melbourne property market is showing signs of recovery with median prices rebounding from the 2022-2024 correction period. Growth corridors in the northern and western suburbs are attracting significant attention from investors, while established areas continue to offer stable returns. Understanding the specific characteristics of each area, from rental yields to infrastructure development, is crucial for making informed investment decisions.
If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.
Melbourne's property market in mid-2025 offers rental yields ranging from 3.3% to 4.9%, with outer suburbs like Cranbourne and Wyndham Vale delivering the highest returns.
Growth corridors including Melton, Sunbury, and Caroline Springs are projected for 3-5% annual capital growth over the next decade, driven by infrastructure investment and population growth.
| Investment Factor | Best Performing Areas | Key Metrics (2025) |
|---|---|---|
| Highest Rental Yields | Wyndham Vale, Cranbourne, Caroline Springs | 4.5%, 4.1%, 3.9% respectively |
| Capital Growth Potential | Melton, Sunbury, Craigieburn | 5% projected annual growth |
| Infrastructure Investment | Sunshine, Preston, Tarneit | Metro Tunnel, Suburban Rail Loop |
| Population Growth | Wyndham, Beveridge, Northern Corridors | 4.2% annual growth in Wyndham |
| Market Competition | Sunbury, Craigieburn | More buyers than available properties |
| Rental Market Stability | Melbourne Metro | 1.7% vacancy rate, 51 days on market |
| Family-Friendly Areas | Glen Waverley, Box Hill, Balwyn | Top schools, low crime rates |
What's your total investment budget including stamp duty, legal fees, and renovation costs?
Your total investment budget in Melbourne should account for several additional costs beyond the property purchase price.
Stamp duty in Victoria is calculated on a sliding scale, with a $700,000 property attracting approximately $37,000 in stamp duty. First-home buyers and off-the-plan purchases may qualify for concessions that can significantly reduce this cost. Legal fees typically range from $1,500 to $3,000 per transaction, depending on the complexity of the property transfer and any additional legal requirements.
Renovation costs vary dramatically based on your property goals. Cosmetic renovations including paint, flooring, and minor updates may cost $20,000 to $40,000 for a house, while structural work can exceed $100,000. Building and pest inspections add $500 to $1,000 to your upfront costs, plus loan application fees and moving expenses.
As a practical example, for a $700,000 investment property, budget approximately $60,000 to $80,000 in additional costs before any renovation work. This represents roughly 10-12% of the purchase price, which is essential for accurate financial planning.
How much rental yield can you expect in different Melbourne suburbs right now?
Melbourne rental yields in mid-2025 vary significantly across suburbs, with outer areas generally delivering higher returns than inner-city locations.
| Suburb | House Yield | Unit Yield | Median Weekly Rent |
|---|---|---|---|
| Wyndham Vale | 4.5% | - | $430 |
| Cranbourne | 4.1% | - | $507 |
| Caroline Springs | 3.9% | 4.9% | $530 |
| Pakenham | 3.8% | - | $480 |
| Croydon | 3.7% | 4.3% | $600 |
| Melbourne Metro Average | 3.5% | 4.7% | $575 |
| Seaford | 3.3% | - | $510 |
Units consistently yield higher than houses across most suburbs, but houses typically outperform in long-term capital growth. The Melbourne metro average shows units delivering 4.7% yield compared to 3.5% for houses.
What's the average property price trend over the past 5 years in each area?
Melbourne property prices experienced significant volatility over the past five years, with distinct phases of growth and correction.
The 2021 pandemic boom saw median prices surge over 17% as low interest rates and government incentives drove unprecedented demand. This was followed by a correction period in 2022-2024, with prices falling approximately 3% in 2024 as interest rates rose and market conditions tightened.
As of early 2025, Melbourne's median dwelling value sits at $772,561, with the market showing clear signs of recovery. Monthly price increases have returned, and buyer activity is strengthening across key suburbs. Specific suburb performance in 2025 includes Croydon units up 9.6% year-on-year, Caroline Springs houses up 2.5%, while some established areas like Sunbury show modest growth but strong future potential.
The recovery phase appears sustainable, driven by population growth, infrastructure investment, and stabilized interest rate expectations. Growth corridors are leading the recovery, while premium inner-city areas are following at a more measured pace.
How high is the capital growth rate forecast in each suburb over the next 5 to 10 years?
Capital growth forecasts for Melbourne suburbs over the next 5-10 years show strongest potential in growth corridors with infrastructure investment.
Melton leads projections with 5% annual growth expected, driven by affordability and major infrastructure developments. Sunbury, Craigieburn, and Caroline Springs are ranked for "supercharged" growth in 2025, with strong prospects continuing through the decade due to their proximity to transport upgrades and new housing estates.
Northern and western growth corridors including Beveridge, Tarneit, and Wyndham are expected to outperform established areas due to new residential estates and improved transport links. These areas benefit from the Suburban Rail Loop and Metro Tunnel projects, which will significantly improve connectivity to Melbourne's CBD and employment centers.
Most property analysts expect 3-5% annual growth in well-located, family-oriented suburbs with confirmed infrastructure investment. This represents healthy, sustainable growth compared to the unsustainable boom periods of previous cycles.
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What are the current vacancy rates and days on market for rentals in each area?
Melbourne's rental market in mid-2025 shows a vacancy rate of 1.7-1.8%, up from 1.1% a year prior, indicating slightly easier conditions for tenants.
Properties are taking a median of 51 days to sell in February 2025, compared to 42 days in 2024, suggesting a more balanced market with less frenzied buying activity. However, outer suburbs in growth corridors may experience faster sales due to high demand from investors and owner-occupiers seeking affordability.
The slight increase in vacancy rates provides better opportunities for tenants to find suitable rental properties, while still maintaining healthy demand for landlords. This balanced market condition is considered optimal for sustainable long-term investment returns.
Regional variations exist, with high-demand growth suburbs like Sunbury and Craigieburn showing tighter rental markets and faster property sales due to limited supply and strong buyer interest.
How much population growth and infrastructure investment is projected for each suburb?
Population growth and infrastructure investment are key drivers of Melbourne's property market, with specific suburbs benefiting significantly from major projects.
Wyndham leads population growth with 4.2% increase in 2024, supported by new housing developments and improved transport connections. This growth rate is among the highest in metropolitan Melbourne and is expected to continue as new residential estates are completed.
Major infrastructure projects transforming Melbourne include the Metro Tunnel, Suburban Rail Loop, Melbourne Airport Rail Link, and upgrades to suburban train stations. These projects are boosting property demand in growth corridors, particularly areas like Sunshine, Preston, Broadmeadows, and Tarneit.
The Suburban Rail Loop will connect middle-ring suburbs directly, bypassing the CBD for cross-city travel. This infrastructure will significantly benefit suburbs along the route, creating new employment and residential hubs. Areas identified for major infrastructure and zoning changes include growth corridors in the north and west, where new transport links will improve accessibility and drive property values.
What are the average rental prices for different property types in the suburbs you're considering?
Rental prices across Melbourne vary significantly by property type and location, with houses commanding higher weekly rents than units in most suburbs.
| Property Type | Metro Median Weekly Rent | Example Suburbs |
|---|---|---|
| Houses | $580 | Croydon $600, Caroline Springs $530, Cranbourne $507 |
| Units | $575 | Croydon $510, Mooroolbark $495, South Kingsville $425 |
| Townhouses | $550 | Middle-ring suburbs with good transport access |
| Apartments (2BR) | $520 | Inner suburbs and transport corridors |
| Apartments (1BR) | $450 | CBD fringe and student areas |
Rental prices have stabilized after rapid growth in 2023, with some suburbs experiencing slight declines or flatlining in 2025. This stabilization provides better predictability for investment planning and cash flow projections.
What are the crime rates, school zones, transport options, and amenities in those areas?
Crime rates, education quality, transport access, and amenities significantly impact property investment potential and tenant appeal across Melbourne suburbs.
Crime rates vary dramatically across Melbourne, with inner-city and northwest suburbs including Fitzroy, Sunshine, Dandenong, and Broadmeadows experiencing higher crime rates up to 200% above the state average. Family-friendly areas like Glen Waverley, Box Hill, and Ashburton maintain significantly lower crime rates and stronger community safety.
School zones are highly competitive in top-performing areas, with public and private schools clustered in Glen Waverley, Box Hill, Balwyn, and Mount Waverley. These areas command premium property prices due to their educational reputation and zoning advantages. Properties within these school zones typically experience stronger capital growth and rental demand from families.
Transport networks include extensive tram, train, and bus connections, with suburbs near new rail projects like Sunshine, Preston, and Tarneit benefiting from improved connectivity. The Metro Tunnel and Suburban Rail Loop will transform transport access for many suburbs, making previously car-dependent areas more accessible.
Lifestyle amenities vary by location, with bayside areas like Seaford and Chelsea offering beach and recreational amenities, while inner north suburbs like Brunswick and Fitzroy provide vibrant cafe and nightlife scenes. Outer growth corridors offer new shopping centers and recreational facilities as part of planned community developments.
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How many properties are currently for sale and how competitive is the market in each suburb?
Melbourne's property market competitiveness varies significantly across suburbs, with growth corridors experiencing the highest buyer competition.
New listings are down 7.4% year-on-year, while total listings have increased 1.8%, creating a more balanced market overall. However, specific suburbs like Sunbury and Craigieburn have more buyers than available properties, making them highly competitive for investors and creating upward pressure on prices.
Buyer demand is showing an upward trajectory in 63% of Melbourne suburbs, particularly in growth corridors and gentrifying areas. This demand is driven by a combination of renewed investor interest and owner-occupiers seeking affordability in outer suburbs with infrastructure potential.
Market competition is intensifying in suburbs with confirmed infrastructure projects, population growth, and development potential. Buyers in these areas often face multiple offer situations and need to act quickly to secure properties.
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What types of properties (apartments, townhouses, houses) perform best in each area?
Property type performance varies across Melbourne suburbs based on demographic preferences, land availability, and market dynamics.
Houses consistently deliver the best long-term capital growth, especially in family-friendly, owner-occupier dominated suburbs. These properties benefit from land value appreciation and appeal to families seeking space and gardens, creating strong resale demand.
Townhouses are increasingly popular in middle-ring suburbs as they offer a compromise between affordability and space. They typically require lower maintenance than houses while providing more space than apartments, making them attractive to young families and downsizers.
Units and apartments deliver higher rental yields, particularly in inner-city and established suburbs with good transport links. However, they often underperform houses in capital growth due to oversupply issues and body corporate complications.
In growth corridors, newly built houses and townhouses in master-planned communities tend to outperform older apartments. Established inner suburbs favor quality units in boutique developments over large apartment complexes.
What are the council rates, body corporate fees, and ongoing maintenance costs for the properties you're targeting?
Ongoing property costs in Melbourne significantly impact investment returns and must be factored into cash flow calculations.
Council rates typically range from $1,500 to $3,000 per year for houses, with higher rates for larger properties or premium suburbs. These rates fund local services including waste collection, street maintenance, and community facilities, and generally increase annually with inflation.
Body corporate fees for apartments and townhouses range from $2,000 to $5,000 per year, depending on building amenities and management requirements. Properties with swimming pools, gyms, concierge services, or extensive common areas command higher fees. These costs can significantly impact rental yields and should be carefully evaluated.
Maintenance costs vary by property age and type, with investors typically budgeting $2,000 to $5,000 annually for routine upkeep. Older homes may require more significant maintenance including roof repairs, plumbing updates, and electrical work. New properties may have warranty coverage but will require increasing maintenance as they age.
Additional costs include landlord insurance, property management fees (typically 7-9% of rental income), and periodic repairs or renovations to maintain rental appeal and property value.
How much leverage can you get from your lender and what is the estimated cash flow projection per property?
Lending conditions in mid-2025 allow investors to access significant leverage while maintaining conservative lending standards.
Most lenders offer up to 80% loan-to-value ratio (LVR) for investment properties, with some extending to 90% LVR with lenders mortgage insurance (LMI). Interest rates are sitting around 5.7% to 6.0% per annum for variable investment loans, with fixed-rate options available at similar levels.
Cash flow projections for Melbourne investment properties typically show neutral to slightly negative gearing with current yields and interest rates. For example, a $700,000 house with 4% yield generates $28,000 annual rent, while a $560,000 loan at 6% interest costs $33,600 annually in interest alone.
After accounting for council rates, insurance, maintenance, and property management fees, most properties require additional investor contribution of $5,000 to $15,000 annually before tax benefits. However, negative gearing provides tax deductions for property losses, and capital growth typically compensates for negative cash flow over time.
Investors should model various scenarios including interest rate changes, vacancy periods, and maintenance costs to ensure financial sustainability throughout different market cycles.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Melbourne's property market in 2025 presents compelling opportunities for informed investors willing to conduct thorough research.
Growth corridors offer the best combination of rental yields and capital growth potential, while established areas provide stability and lifestyle amenities for long-term investment success.
Sources
- Savings.com.au - Top Australian Suburbs for Rental Yield
- Satterley - Best Suburbs to Invest in Melbourne
- OpenAgent - Melbourne Property Market
- Property Update - Property Investment Melbourne
- RealEstate.com.au - Melbourne's Supercharged Suburbs for 2025
- Simply Wealth Group - Melbourne's Hidden Gems
- AuCore Elite - Victoria Property Market Trends 2025
- Property Update - Rental Vacancy Rates
- Broker News - Rental Vacancy Rates Rise
- Victorian Property Settlements - Melbourne Suburbs Development Potential