Authored by the expert who managed and guided the team behind the Australia Property Pack
Yes, the analysis of Melbourne's property market is included in our pack
Melbourne's property market is experiencing a significant recovery in 2025, driven by strong population growth and tight rental conditions. Property prices are rising again after the 2023-2024 correction, with median house prices reaching $983,000 and units at $607,000 as of September 2025.
For buyers planning to stay long-term, Melbourne offers compelling opportunities in well-located suburbs with strong fundamentals. Investment prospects remain solid, particularly for units and townhouses in growth corridors, with rental yields ranging from 3.7% to 8.6% depending on location and property type.
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 is recovering strongly in 2025, with prices rising 6%+ and rental vacancy at just 1.1%.
Buying makes financial sense for long-term residents, while investors should focus on units and townhouses in growth suburbs for optimal yields.
| Property Type | Median Price (Sep 2025) | Rental Yield Range |
|---|---|---|
| Houses | $918,000 - $983,000 | 3.7% - 4.9% |
| Units/Apartments | $583,000 - $610,000 | 4.8% - 8.6% |
| Townhouses | ~$600,000 | 4.5% - 6.2% |
| Affordable Areas | Under $700,000 | 5.5% - 7.8% |
| Premium Areas | $2M+ | 2.8% - 4.2% |
| Growth Suburbs | $700K - $1.2M | 4.2% - 6.8% |
| CBD/Inner City | $650,000 - $900,000 | 5.2% - 8.6% |
What types of properties are available in Melbourne in 2025?
Melbourne's property market offers four main property types, each catering to different buyer needs and budgets.
Houses remain the dominant choice for families, with freestanding homes concentrated in middle and outer suburbs. The median price for houses ranges from $918,000 to $983,000 as of September 2025. These properties typically offer larger living spaces, private gardens, and are located in family-friendly neighborhoods with good school access.
Townhouses and villa units have emerged as the fastest-growing property segment, offering approximately 46% savings compared to houses with median prices around $600,000. These properties appeal strongly to young families, downsizers, and investors seeking a balance between space and affordability. The townhouse market is particularly active in middle-ring suburbs undergoing gentrification.
Apartments and units provide the most affordable entry point into Melbourne's property market, with median prices ranging from $583,000 to $610,000. Inner-city apartments, particularly in Melbourne CBD and Carlton, can deliver rental yields up to 8.6%. These properties suit young professionals, students, and investors prioritizing rental returns over capital growth.
Luxury properties exceeding $2 million are concentrated in blue-chip suburbs like Toorak, Brighton, and Kew, offering prestige locations and established amenities.
Is it better financially to buy or rent in Melbourne right now?
The financial equation between buying and renting in Melbourne has shifted significantly in favor of buying during 2025, particularly for long-term residents.
Buying advantages include building equity through projected 6%+ price growth into 2026, stability against sudden rent increases, and access to government incentives for eligible buyers. The main drawbacks involve high upfront costs including deposits and stamp duty, ongoing maintenance expenses, and reduced flexibility for those needing to relocate quickly.
Renting provides lower initial commitment and flexibility to access premium locations otherwise unaffordable to purchase. However, Melbourne rents have surged over 20% since 2023, creating intense competition and reduced long-term security for tenants. Rental vacancy rates sit at just 1.1%, giving landlords significant pricing power.
Financial comparison shows buying typically becomes advantageous after 5-7 years due to equity accumulation versus rent payments. For example, a 2-bedroom unit in Moonee Ponds priced at $680,000 requires a $136,000 deposit and $3,300 monthly mortgage payments at 6% interest, compared to $2,640 monthly rent for similar properties.
As of August 2025, buying is actually cheaper than renting in approximately 23% of Melbourne suburbs, particularly for units in established areas.
How have property prices evolved over the past few years, what are they like now, and what's the forecast?
Melbourne property prices experienced a dramatic cycle from 2021 to 2025, following a clear boom-correction-recovery pattern.
The 2021 property boom delivered exceptional 17% price growth, driven by low interest rates and pandemic-related demand shifts. This was followed by a cooling period in 2022 and a notable correction through 2023 and early 2024 as interest rates rose and buyer activity slowed significantly.
Current prices as of September 2025 show clear recovery momentum, with quarterly growth ranging from 0.3% to 1.2% depending on property type and location. Median dwelling prices have reached approximately $818,000, with houses commanding $918,000 to $983,000 and units ranging from $583,000 to $610,000.
Market forecasts indicate sustained growth of 6% to 6.6% through mid-2026, with top-performing segments expected in inner and middle suburbs plus family homes. This growth is supported by population recovery, international student returns, and constrained housing supply.
Rental yields vary significantly by property type and location, with houses delivering 3.7% to 4.9% (higher in outer suburbs) and units achieving 4.8% to 8.6% (particularly strong in city-fringe and student areas).
What are the main real estate market trends shaping Melbourne in 2025?
Five major trends are fundamentally reshaping Melbourne's property landscape in 2025.
Strong population growth has returned as the primary market driver, fueled by resumed international migration and student arrivals. This demographic recovery is creating sustained housing demand across all property segments, particularly in inner and middle-ring suburbs with good transport connectivity.
Supply constraints have intensified throughout 2025, with fewer property listings, faster sales periods, and increased buyer competition. This supply-demand imbalance is supporting price growth and creating seller-favorable market conditions across most suburbs.
The rental crisis has reached critical levels, with vacancy rates at 1.1% and year-on-year rent increases of 15%. This tight rental market is driving investors toward properties with strong rental potential, particularly units and townhouses in high-demand areas.
Affordability challenges are pushing buyers toward alternative property types, with townhouses and apartments gaining market share as houses become increasingly expensive for average buyers. This trend is particularly pronounced among first-home buyers and young families.
Urban renewal and infrastructure development continue transforming middle and outer suburbs, with major transport projects and gentrification creating new investment opportunities in previously overlooked areas.
Step by step, how does the buying process work for a property in Melbourne?
Melbourne's property buying process follows a structured seven-step approach that typically takes 8-12 weeks from initial search to settlement.
Research and suburb selection form the critical first step, involving detailed analysis of price trends, amenities, transport links, and growth prospects in target areas. This research phase should include studying recent sales data, rental yields, and demographic trends to identify suburbs matching your budget and objectives.
Home loan pre-approval comes next, requiring financial documentation and establishing your borrowing capacity. While 20% deposits are ideal, some lenders accept lower deposits with mortgage insurance. Pre-approval strengthens your negotiating position and clarifies your realistic price range.
Property searching utilizes major platforms like realestate.com.au and Domain, plus agency websites and buyer's agents for off-market opportunities. Attending open inspections and building relationships with local agents can provide early access to suitable properties.
Due diligence involves professional building and pest inspections, zoning checks, and strata report reviews for apartments. This step is crucial for identifying potential issues that could affect property value or require costly repairs.
Making offers and contract negotiation require strategic timing and market knowledge. Melbourne's competitive market often involves multiple bidders, making strong initial offers and flexible settlement terms advantageous.
Legal processes include engaging a solicitor or conveyancer to review contracts, conduct property searches, and ensure legal compliance. They'll examine the Contract of Sale and Section 32 vendor statement for any issues.
Settlement typically occurs 6-8 weeks after contract signing, involving final inspections, loan documentation, and property transfer. Your legal representative coordinates with lenders and vendors to ensure smooth completion.
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Where can I actually find properties for sale — which agencies, platforms, or networks should I use?
Melbourne's property search requires a multi-platform approach combining digital portals, established agencies, and specialized networks for comprehensive market coverage.
Digital real estate portals provide the broadest property exposure, with realestate.com.au, Domain, and OpenAgent serving as the primary search platforms. These sites offer detailed property information, price histories, suburb data, and direct agent contact details. Most Melbourne properties appear on these platforms, making them essential starting points for any property search.
Established real estate agencies dominate Melbourne's market, with Jellis Craig, Ray White, Barry Plant, Belle Property, and Marshall White handling significant market share. These agencies often have exclusive listings and strong local knowledge in their specialized areas. Building relationships with agents in target suburbs can provide early access to properties before public marketing.
Specialized networks offer unique advantages for specific buyer types. Buyers' agents provide access to off-market properties and professional negotiation services, particularly valuable in competitive market conditions. Investment-focused property advisors specialize in rental yield analysis and growth suburb identification.
Commercial property seekers should focus on specialized firms like Cushman & Wakefield, which handle larger investment properties and development opportunities.
It's something we develop in our Australia property pack.
For different budget levels, what kinds of properties can I realistically expect to get?
| Budget Level | Property Types | Typical Locations |
|---|---|---|
| Under $700K | Entry-level units, older houses | Melton, Werribee, Cranbourne, Coolaroo, Dallas, Broadmeadows, Sunshine West |
| $700K - $1.2M | Modern townhouses, family homes | Ringwood, Moonee Ponds, Bentleigh, Reservoir, Mount Waverley |
| $1.2M - $2M | Quality houses, premium townhouses | Gentrifying areas, established suburbs near CBD, top school zones |
| $2M+ | Luxury homes, prestige properties | Toorak, Brighton, Kew, Armadale, Albert Park, bayside suburbs |
| $500K - $700K | Student-focused apartments, small units | CBD fringe, university areas, transport corridors |
| $800K - $1.5M | Contemporary apartments, larger units | Inner suburbs, trendy neighborhoods, lifestyle precincts |
| $400K - $600K | Studio apartments, small units | Outer suburbs, developing areas, transport nodes |
What are the biggest mistakes buyers often make when purchasing property in Melbourne, and how can I avoid them?
Melbourne property buyers commonly make five critical mistakes that can significantly impact their investment returns and lifestyle satisfaction.
Buying in lifestyle-poor or oversupplied outer suburbs represents the most costly error, as these areas typically experience weak long-term capital growth despite lower entry prices. Suburbs lacking employment opportunities, transport connectivity, or amenities struggle to attract quality tenants and maintain property values during market downturns.
Ignoring current rental data leads to overestimating investment returns, particularly when relying on outdated yield calculations. Melbourne's rental market changes rapidly, and properties that showed strong yields 12 months ago may now struggle with vacancy or reduced rents due to new supply or demographic shifts.
Overlooking zoning and building compliance issues creates expensive problems that affect both property value and resale potential. This includes purchasing properties with illegal modifications, heritage restrictions, or development limitations that weren't properly disclosed during sales processes.
Rushing into auction-heavy or overhyped areas often results in overpaying during market peaks. Buyers caught in competitive bidding situations frequently exceed their budget limits without conducting proper comparative analysis of recent sales in the area.
Using inexperienced or non-local buyers' agents can prove costly when they lack understanding of specific suburb dynamics, school zones, or infrastructure developments that significantly impact property values.
Avoidance strategies include thorough due diligence research on neighborhood fundamentals, staying updated on current rental data and market conditions, consulting experienced local professionals, and maintaining disciplined bidding limits regardless of auction pressure.
What's the cost of living in Melbourne like, especially compared to other major cities?
Melbourne's cost of living in 2025 remains substantial but offers better value than Sydney while exceeding smaller Australian cities significantly.
Single professionals typically require AU$4,000 to $5,000 monthly for moderate lifestyle including rent, food, transport, and entertainment. This budget covers a one-bedroom apartment in middle suburbs, regular dining out, public transport, and reasonable leisure activities.
Families of four need approximately AU$8,000 to $9,000 monthly to maintain comfortable living standards. This includes family housing, quality schooling options, vehicle expenses, health insurance, and children's activities. Private school fees can add AU$15,000 to $40,000 annually per child.
Compared to Sydney, Melbourne offers slightly lower rental costs but similar overall expenses for most lifestyle categories. Both cities substantially exceed Adelaide, Perth, or regional centers where comparable lifestyles cost 20-30% less. International comparisons show Melbourne expenses similar to major European cities but lower than New York or London.
Housing represents the largest expense component, typically consuming 30-40% of household budgets. Transport, schooling, and healthcare form the next major cost categories, with public transport passes costing AU$1,500 annually and private health insurance averaging AU$2,000-4,000 for families.
Which neighborhoods are best depending on budget — affordable, upcoming, and upscale — and what are the strengths and weaknesses of each?
| Budget Tier | Key Neighborhoods | Main Strengths | Notable Weaknesses |
|---|---|---|---|
| Affordable | Melton, Cranbourne, Werribee, Reservoir, Coolaroo, Dallas, Broadmeadows | Low entry costs, strong rental yields 5.5-7.8%, major infrastructure upgrades planned | Extended commute times, limited entertainment options, slower gentrification |
| Upcoming/Growth | Footscray, Coburg North, Ringwood, Bentleigh, Sunshine West, Preston, Essendon | CBD proximity, active gentrification, infrastructure development, lifestyle improvements | Construction disruption, mixed amenity quality, transitional neighborhood character |
| Upscale | Kew, Brighton, Toorak, Albert Park, Armadale, Middle Park, Hawthorn | Top-tier schools, premium lifestyle amenities, heritage charm, walkable neighborhoods | High entry prices, lower rental yields 2.8-4.2%, limited development potential |
| Student-Focused | Carlton, Brunswick, Fitzroy, Parkville, Clayton | High rental demand, proximity to universities, vibrant culture, public transport | Property condition varies, noise levels, transient tenant base |
| Family-Oriented | Glen Waverley, Box Hill, Doncaster, Camberwell, Malvern East | Excellent schools, family amenities, established communities, good transport | Higher prices, competition for quality properties, limited nightlife |
| Investment-Focused | Moonee Ponds, St Kilda, South Yarra, Richmond, Prahran | Strong rental yields, diverse tenant base, capital growth potential | Property management challenges, market volatility, regulatory changes |
| Lifestyle | St Kilda, Port Melbourne, South Melbourne, Southbank, Docklands | Entertainment options, dining scene, harbor views, apartment living | Higher density, parking limitations, tourist crowds, wind corridors |
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What is life like as an expat in Melbourne, both socially and financially?
Melbourne provides excellent expat lifestyle quality despite significant financial commitments, offering world-class amenities and cultural diversity that justify the higher costs.
Social integration proves relatively straightforward thanks to Melbourne's multicultural character, with established communities from Greek, Italian, Vietnamese, Chinese, and Indian backgrounds. The city's renowned arts scene, music venues, and food culture create abundant networking and social opportunities. Professional networking is strong across industries, particularly in finance, technology, healthcare, and creative sectors.
International schools and universities facilitate expat family integration, while the healthcare system provides excellent services through both public and private options. Public transport connectivity makes car ownership optional in inner suburbs, though families often find vehicles necessary for convenience and weekend activities.
Financial considerations require careful planning, with higher salaries typically offsetting increased living costs for skilled professionals. Expats should budget for initial setup costs including bond payments, utility connections, and potential temporary accommodation while securing permanent housing.
Weather adaptation takes time, as Melbourne's variable climate requires wardrobe adjustments and seasonal activity planning. The city's coffee culture, weekend markets, and outdoor lifestyle generally help expats adapt quickly to local customs and social patterns.
Banking and financial services are sophisticated and expat-friendly, though building credit history takes time. Professional services like accounting and legal advice specifically cater to expat needs, particularly for property purchases and tax obligations.
If I plan to rent out the property, what should I know about long-term rentals and short-term rentals?
Melbourne's rental market offers distinct opportunities and challenges for long-term and short-term rental strategies, with recent regulatory changes significantly affecting short-term rental viability.
Long-term rentals provide stable income streams with rental yields ranging from 3.7% to 4.9% for houses and 4.7% to 8.6% for units. Prime areas include high population growth corridors like Melton, Werribee, and Moonee Ponds, plus university precincts like Brunswick, St Kilda, and Carlton. Target tenant profiles include families seeking suburban lifestyle, young professionals preferring inner suburbs, and international students concentrated near universities.
Standard tenancy regulations provide predictable legal frameworks with defined rent increase limits, tenant rights, and termination procedures. Property managers typically charge 6-8% of rental income for full management services, handling tenant placement, maintenance coordination, and compliance requirements.
Short-term rentals face substantial regulatory changes from January 2025, including a 7.5% state levy on all Airbnb and similar platforms. Additional restrictions include compulsory registration, enhanced fire safety requirements, and council-specific limitations on operating days in some areas.
Optimal short-term rental locations remain CBD areas like Docklands, Southbank, and Melbourne Central, plus neighborhoods near major events and tourist attractions. However, increased compliance costs and tax obligations significantly reduce profit margins compared to pre-2025 conditions.
It's something we develop in our Australia property pack.
Financial modeling must incorporate new levy costs, management fees typically 15-25% for short-term rentals, and potential vacancy periods during low-demand seasons. Many investors are shifting toward long-term rentals due to improved certainty and reduced regulatory burden.
Based on all this, is it worth buying property in Melbourne in 2025 — for living, renting out, or reselling later at a higher price?
Melbourne property investment worthiness in 2025 depends heavily on your timeframe, location selection, and specific objectives, with strong fundamentals supporting long-term positions.
For owner-occupiers planning 5-7 year horizons, buying in inner or middle-ring suburbs with strong amenities and transport connectivity offers compelling value. The combination of rising rents, tight rental availability, and projected 6%+ capital growth through 2026 makes ownership financially advantageous compared to renting for established households.
Investment purposes show particular strength in carefully selected unit and townhouse markets, where tight rental conditions deliver solid yields while population growth supports capital appreciation. Focus areas include growth corridors with infrastructure development, university precincts with student demand, and gentrifying suburbs with improving amenities.
Short-term speculation or quick resale strategies carry higher risk following the recent price recovery. While growth projections are positive, they don't match the exceptional returns of 2021, making longer investment horizons more prudent for capital growth objectives.
Market timing favors buyers in late 2025, as the recovery phase offers better value than peak conditions while still capturing growth momentum. Suburb selection remains critical, with inner and middle suburbs outperforming outer areas lacking employment or transport connectivity.
Success factors include thorough due diligence on neighborhood fundamentals, updated understanding of rental regulations, and disciplined financial planning that accounts for all ownership costs including maintenance, rates, and potential interest rate changes.
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 a compelling investment case for buyers with long-term perspectives and strategic location choices.
The fundamentals supporting price growth, combined with tight rental conditions and population recovery, create favorable conditions for both owner-occupiers and investors willing to conduct thorough market research.
It's something we develop in our Australia property pack.
Sources
- Property Update - Melbourne Property Investment
- OpenAgent - Melbourne Property Market
- Best Property Agent - Melbourne Market Update July 2025
- AuCore Elite - Melbourne's Best Suburbs for Investors
- Langwell Harper - Melbourne's Hottest Property Type
- Savings.com.au - Rental Yield Victoria
- Savings.com.au - Top Australian Suburbs for Rental Yield
- Cushman & Wakefield - Investment Sales Melbourne
- Best Property Agent - Buying vs Renting in 2025
- KPMG - House Prices to Rise Gradually
-Melbourne Property Buying Process: Complete Guide
-Should You Buy Property in Melbourne: Investment Analysis
-Melbourne Property Forecast: Market Predictions
-Average Property Prices in Melbourne: Current Data
-Average Rental Yields in Melbourne: Investment Returns