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Yes, the analysis of Melbourne's property market is included in our pack
Thinking about buying a 3-bedroom apartment in Southbank? It’s a great area, but you're probably wondering: is now the right time to buy, or should you wait for prices to drop?
And what about long-term investment—should you look into other suburbs like Fitzroy or Brunswick where property values might appreciate more over time?
In this article, we’ll answer these questions. We know this market quite well - and we have put all our knowledge in the Melbourne Property Pack.
Will property prices increase in Melbourne in 2025?
Yes, property prices in Melbourne are expected to rise in 2025, driven by a combination of strong demand and limited housing supply.
Backed by our fresh, in-depth market analysis, we’re confident that Melbourne remains a key city for both domestic and international investors.
While there are challenges like economic fluctuations and potential interest rate hikes, the primary factors driving Melbourne's property market growth are expected to persist.
Demand, particularly in desirable suburbs, continues to outpace supply, making significant price drops unlikely. Additionally, Melbourne's reputation as a cultural and educational hub continues to attract buyers from around the globe.
Signals pointing to a property price increase in Melbourne
Here are some factors suggesting prices could increase:
A continued population growth in Melbourne, driven by both international migration and domestic relocation, is expected to sustain high demand for housing, particularly in inner-city and suburban areas.
The limited availability of land for new developments in Melbourne's established suburbs is likely to constrain supply, putting upward pressure on property prices as demand remains strong.
Ongoing infrastructure projects, such as the expansion of public transport networks and road improvements, are set to enhance connectivity and accessibility, making certain areas more attractive and potentially increasing property values.
Melbourne's status as a leading educational hub, with numerous universities and colleges, continues to attract international students and academics, bolstering demand for rental properties and investment opportunities.
The city's vibrant cultural scene and lifestyle amenities make it a desirable location for both local and international buyers, supporting sustained demand for properties in key areas.
Government incentives for first-time homebuyers and investors are expected to stimulate market activity, encouraging more people to enter the property market and drive up prices.
A stable economic outlook for Australia, with expected growth in employment and wages, is likely to boost consumer confidence and purchasing power, further supporting the property market.
Signals pointing to a property price decrease in Melbourne
Here are some factors suggesting prices could fall:
Potential interest rate increases could make borrowing more expensive, reducing affordability for some buyers and potentially cooling demand in the property market.
Economic uncertainties, such as global market fluctuations or domestic policy changes, could impact consumer confidence and lead to a more cautious approach to property investment.
Rising construction costs and supply chain disruptions could delay new housing projects, affecting the overall supply and potentially leading to short-term market volatility.
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If property prices go up in Melbourne, how much would they increase by?
If real estate prices in Melbourne were to rise in 2025, the increase would likely be around 3% to 7% of their 2024 values.
Typically, real estate in dynamic markets like Melbourne appreciates by approximately 3% to 7% annually over the long term. However, fluctuations can occur depending on factors such as region, season, and property type.
It means that, if you spot a charming 2-bedroom apartment in Southbank for 850,000 AUD today, don't be surprised if it's priced between 875,500 and 909,500 AUD this time next year.
To give you a better understanding, here is a table that shows 7 types of Melbourne real estate properties, their estimated prices in 2024, and projections for 2025 based on potential price increases of 3%, 5%, and 7%.
| Type of Property | Average Price in 2024 (AUD) | Price in 2025 (3% increase) | Price in 2025 (5% increase) | Price in 2025 (7% increase) |
|---|---|---|---|---|
| Victorian Terrace (60 sqm / 646 sqft) | AUD 900,000 | AUD 927,000 | AUD 945,000 | AUD 963,000 |
| Modern Apartment (75 sqm / 807 sqft) | AUD 1,200,000 | AUD 1,236,000 | AUD 1,260,000 | AUD 1,284,000 |
| Luxury Penthouse (100 sqm / 1,076 sqft) | AUD 2,500,000 | AUD 2,575,000 | AUD 2,625,000 | AUD 2,675,000 |
| Studio (30 sqm / 323 sqft) | AUD 450,000 | AUD 463,500 | AUD 472,500 | AUD 481,500 |
| Loft (80 sqm / 861 sqft) | AUD 1,600,000 | AUD 1,648,000 | AUD 1,680,000 | AUD 1,712,000 |
| Townhouse (150 sqm / 1,615 sqft) | AUD 3,500,000 | AUD 3,605,000 | AUD 3,675,000 | AUD 3,745,000 |
| Investment Property (50 sqm / 538 sqft) | AUD 750,000 | AUD 772,500 | AUD 787,500 | AUD 802,500 |
Everything you need to know is included in our Property Pack for Melbourne
If real estate prices go up in Melbourne, which areas are likely to see the biggest increases?
Today, people who want to move to Melbourne are looking for a blend of cultural charm and modern amenities, which Fitzroy offers. Hence, we could see a price increase there in 2025.
Also, lately, there's been a shift toward more youthful, vibrant neighborhoods, and Brunswick has really taken off.
We like it when information is clear and easy to digest. So, here’s a table that highlights the areas where prices might rise the most, along with the reasons behind those expected increases. It’s very high-level. If you want more details on a specific area, please check our real estate pack tailored to the Melbourne market.
| Neighborhood | Level of Increase | Why |
|---|---|---|
| Fitzroy | High | Recent development of boutique apartments and its increasing appeal to young professionals and creatives, driving demand. |
| South Yarra | High | Expected rise due to limited housing stock, upcoming luxury retail developments, and growing demand for prime properties in central Melbourne. |
| Richmond | Medium-High | Ongoing gentrification and new transport links, along with several planned redevelopment projects in the area, are likely to push prices higher. |
| Docklands | Medium | The shift towards hybrid workspaces is driving demand for residential properties near business districts, combined with new mixed-use developments. |
| Brunswick | Medium-High | Eco-friendly urban projects and recent construction of new schools and parks are increasing its attractiveness for families, pushing prices upward. |
| St Kilda | Medium | Investment in local infrastructure, such as the extension of tram lines and renovation of historic areas, is boosting long-term value. |
| Collingwood | Medium-High | With new cultural and commercial spaces being developed, this trendy neighborhood is seeing increased demand from both residents and investors. |
| Prahran | High | Upcoming large-scale urban regeneration projects and improved public transport access are expected to make this area more desirable. |
| Hawthorn | Medium-High | Its proximity to Melbourne CBD, along with new office and residential developments, makes it increasingly attractive to professionals seeking more space. |
| Footscray | Medium | Gentrification and cultural regeneration projects are attracting new residents, leading to rising prices as the area becomes more fashionable. |
| Toorak | High | As new luxury developments are launched, demand for premium housing among wealthy buyers is expected to further increase property values. |
| Melbourne CBD | High | Upcoming restoration of historic buildings and high-profile cultural projects are driving a renewed focus on this central, vibrant location. |
-The best areas to buy a property in Melbourne
If I'm looking to invest in real estate, what types of properties should I focus on for the best value appreciation in Melbourne?
In 2025, Melbourne real estate trends focus on tech-smart, energy-efficient apartments, larger suburban homes for families, properties with outdoor spaces, and eco-friendly buildings—all driving higher demand and prices. Here is a summary.
- Tech-Equipped and Energy-Efficient Apartments:
Driven by remote work and sustainability trends, these homes offer smart technology features and energy-saving systems. They cater to young professionals and tech workers, making them a hot commodity in 2025.
- Family-Sized Homes in Suburban Areas:
With a growing demand for larger living spaces, especially among families, suburban areas near Melbourne, such as Werribee and Craigieburn, are seeing increased interest. Proximity to parks and reputable schools is a major factor driving value.
- Properties with Outdoor Spaces:
Post-pandemic, outdoor spaces like terraces, balconies, or gardens have become highly desirable. In dense areas like Melbourne's CBD, these features offer a much-needed escape and are likely to drive up property values.
- Eco-Friendly Buildings with Low Carbon Footprints:
Melbourne's commitment to sustainability is boosting demand for eco-certified buildings. Buyers are increasingly valuing properties that align with the city’s green goals, leading to price appreciation in this category.
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