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 showing strong momentum with median house prices reaching $983,000 to $1.06 million as of September 2025.
The city is experiencing steady price growth of 2.3% annually, robust auction clearance rates above 75%, and extremely tight rental supply with vacancy rates below 1.8%. Population growth of over 76,000 new residents annually and forecasted rate cuts are driving optimistic projections for 4-6.6% annual price growth through 2027.
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 experiencing steady growth with median house prices around $1 million and strong buyer demand reflected in 75% auction clearance rates.
Tight rental supply, robust population growth, and expected interest rate cuts position Melbourne for continued price appreciation through 2027.
| Metric | Current Value (Sept 2025) | Year-on-Year Change |
|---|---|---|
| Median House Price | $983,000 - $1,063,719 | +2.3% ($24,000) |
| Monthly Sales Volume | Above 5-year average | +8% higher |
| Auction Clearance Rate | 73-76% | +22 percentage points |
| Rental Vacancy Rate | 1.5-1.8% | Stable/tighter |
| Weekly House Rent | $599 | +4.3% |
| Weekly Apartment Rent | $560 | +5-6% in tight suburbs |
| Price Growth Forecast | 4-6.6% annually | 2026-2027 projection |
What's the current median house price in Melbourne, and how has it changed compared to last year?
Melbourne's median house price sits between $983,000 and $1,063,719 as of September 2025, depending on the data source and property type included in calculations.
Over the past 12 months, Melbourne house prices have increased by 2.3%, representing approximately $24,000 in absolute growth. This steady appreciation signals the market has recovered from previous stagnation periods and entered a consistent upward trajectory.
The price growth reflects renewed buyer confidence following interest rate adjustments and strong population inflows into Melbourne. Real estate agents report increased activity across most suburbs, with particularly strong demand in middle-ring areas offering better value compared to inner-city locations.
This growth rate positions Melbourne competitively among Australian capital cities, with many forecasters predicting the city will reach the $1.1 million median milestone by late 2025 or early 2026.
It's something we develop in our Australia property pack.
How many properties are being sold each month right now, and is that higher or lower than the 5-year average?
Melbourne property sales volumes are currently running 8% higher year-on-year, with approximately 92,000 dwellings sold annually across the metropolitan area.
This translates to roughly 7,600 properties changing hands monthly, which sits 4-8% above the 5-year historical average. The increased activity indicates strong market momentum driven by improved buyer confidence and better financing conditions.
Sales volumes have been consistently elevated since mid-2024, with both houses and apartments experiencing increased transaction activity. The higher turnover reflects a combination of factors including returning investor interest, first-home buyer programs, and property owners taking advantage of improved market conditions to sell.
Regional variations show inner Melbourne maintaining steady sales levels while outer suburbs experience more pronounced increases in transaction volumes, particularly in growth corridors where new housing developments are being completed.
What's the clearance rate at auctions this quarter, and how does it compare with the same period last year?
Melbourne's auction clearance rates are currently sitting between 73-76%, representing a dramatic improvement from market conditions twelve months ago.
This clearance rate marks a substantial increase of 19-22 percentage points compared to the same period last year, when rates languished around 54%. The current levels indicate strong buyer competition and healthy demand across most price segments and suburbs.
The improved clearance rates reflect several market dynamics including reduced interest rates, increased buyer confidence, and limited stock availability in many sought-after areas. Real estate agents report multiple bidders at most auctions, with properties frequently selling above reserve prices.
These clearance rates are among the highest Melbourne has seen in recent years, suggesting the market has shifted decisively in favor of sellers compared to the more subdued conditions experienced in 2023 and early 2024.
What's the current rental vacancy rate across Melbourne, and which suburbs are seeing the tightest supply?
Melbourne's overall rental vacancy rate sits between 1.5-1.8% as of September 2025, indicating a tight rental market with limited available properties for tenants.
Several suburbs are experiencing extremely constrained rental supply with vacancy rates well below 1%. Areas including Ringwood, Saint Albans, and Eltham report vacancy rates near 0.5%, creating intense competition among prospective tenants and driving rent increases.
The Melbourne CBD presents an exception with higher vacancy rates around 3-4%, primarily due to the continued adjustment following pandemic-related changes in office work patterns and student accommodation preferences.
| Area Type | Vacancy Rate | Market Condition |
|---|---|---|
| Inner Melbourne | 1.2-1.5% | Very tight |
| Middle Ring Suburbs | 0.5-1.0% | Extremely tight |
| Outer Growth Areas | 1.8-2.2% | Tight |
| Melbourne CBD | 3.0-4.0% | Balanced |
| Established Suburbs (Ringwood, St Albans) | 0.5-0.8% | Critical shortage |
Don't lose money on your property in Melbourne
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
How much have average weekly rents increased in the past 12 months for both houses and apartments?
Melbourne house rents have increased significantly over the past 12 months, with median weekly rents now reaching $599, representing growth between 0.7% and 4.3% depending on the suburb and property type.
Apartment rental growth shows more variation across the market. The median weekly rent for apartments currently sits around $560, with top-performing suburbs experiencing 5-6% annual increases while the overall metropolitan average shows minimal change due to CBD oversupply affecting aggregate figures.
The rental growth reflects the extremely tight vacancy conditions across most of Melbourne, with landlords able to command higher rents due to limited available properties. Newer apartments and well-located houses are seeing the strongest rental growth, while older stock in oversupplied areas faces more modest increases.
Regional variations are significant, with growth corridor suburbs and established middle-ring areas leading rent increases, while the CBD and some inner-city apartment markets show more subdued growth due to higher vacancy rates.
What is the forecasted annual growth rate in property prices over the next 2 to 3 years?
Melbourne property prices are forecast to grow at an annual rate of 4-6.6% over the next 2-3 years, with the potential for prices to increase by approximately $65,000 by the end of 2026.
This growth trajectory would see Melbourne outperform most other Australian capital cities, driven by strong population growth, constrained housing supply, and expected interest rate cuts throughout 2025 and into 2026.
By 2027, sustained price growth is expected to continue, contingent upon the Reserve Bank maintaining accommodative monetary policy and Melbourne's population growth remaining robust. The forecast assumes continued overseas migration and limited new housing completions relative to demand.
Property market analysts from major banks and research firms consistently rank Melbourne among the top-performing capitals for price growth, with some projections suggesting the median house price could approach $1.15-1.2 million by late 2026.
How many new housing developments or building approvals are expected in Melbourne this year?
Victoria recorded approximately 17,076 new dwelling approvals in June 2025, representing a 12% increase from January 2025 and 6.5% growth year-on-year.
Despite increased approvals, annual housing completions remain at their lowest level in a decade, creating a significant supply-demand imbalance. Detached house approvals have stabilized while apartment and unit approvals are rising more rapidly to meet rental demand.
The building approval pipeline suggests Melbourne will see continued development activity throughout 2025, though actual completions typically lag approvals by 12-18 months. Construction industry challenges including labor shortages and material costs continue to impact delivery timelines.
Housing industry forecasts indicate that even with increased approvals, new supply will struggle to keep pace with population growth and household formation, maintaining upward pressure on both purchase prices and rental rates.
What's the current average time a property spends on the market before being sold?
Properties in Melbourne currently spend an average of 37 days on the market before being sold, which represents a slight increase from the previous year's levels.
This timeframe is longer than the national average, reflecting buyer caution despite strong underlying demand. The extended marketing period suggests purchasers are taking more time to evaluate properties and negotiate terms, even in a seller's market.
Premium properties and well-located homes in established suburbs typically sell faster, often within 2-3 weeks, while apartments and properties requiring renovation may take 6-8 weeks to find buyers.
The days-on-market metric varies significantly by price range and location, with properties under $800,000 selling more quickly due to first-home buyer activity, while luxury properties above $1.5 million require longer marketing campaigns to reach the appropriate buyer pool.
How much have interest rates moved in the past year, and what's the expected impact if they rise or fall again?
The Reserve Bank of Australia cut the cash rate by 0.25 percentage points to 3.60% in August 2025, marking the first reduction in several years and signaling a shift toward more accommodative monetary policy.
Major banks forecast further rate cuts through early 2026, with some projections suggesting the cash rate could decline to as low as 2.85%. These reductions would significantly improve borrowing capacity for homebuyers and investors, potentially adding 10-15% to purchasing power.
If rates continue falling as expected, Melbourne's property market would likely experience accelerated price growth, increased sales volumes, and renewed investor activity. Lower rates historically boost buyer confidence and market participation across all segments.
Conversely, any unexpected rate increases would dampen market activity, reduce buyer demand, and potentially slow price growth. However, current economic conditions suggest rate rises are unlikely in the near term, with the RBA prioritizing economic growth over inflation concerns.
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's the current population growth rate in Melbourne, and how many new residents are projected over the next 5 years?
Melbourne's population is currently 5.39 million and growing at an annual rate between 1.4-2.7%, making it one of Australia's fastest-growing major cities.
Over the past 12 months, Melbourne gained between 76,000 and 142,600 new residents, primarily driven by overseas migration, international student arrivals, and interstate migration from other Australian cities.
Population projections for the next five years suggest Melbourne will add more than 350,000-400,000 new residents by 2030. This growth will be concentrated in outer growth corridors and areas with significant infrastructure development.
1. **Overseas migration** - Largest contributor with skilled workers and students2. **Interstate migration** - People relocating from Sydney and other capitals 3. **Natural population increase** - Births exceeding deaths4. **International students** - University and vocational education sectors5. **Family reunification** - Existing residents bringing relatives6. **Working holiday makers** - Temporary residents extending staysHow many first-home buyers are entering the market compared to investors, and how has this balance shifted in the past 2 years?
First-home buyers currently represent 25-30% of property purchases in Melbourne, supported by government schemes and improved affordability conditions in outer suburbs.
Over the past two years, the balance has shifted significantly in favor of first-home buyers as investor activity declined due to land tax increases, higher interest rates, and reduced tax benefits. This represents a reversal from 2021-2022 when investors dominated many market segments.
Government initiatives including the First Home Owner Grant, stamp duty concessions, and shared equity schemes have strengthened first-home buyer participation. These programs are particularly effective in growth corridors and established suburbs priced below $800,000.
Investor activity is expected to recover through 2025-2026 as interest rates decline and rental yields improve, but first-home buyers will likely maintain a stronger market presence than in previous cycles due to ongoing policy support.
What's the forecast for Melbourne's rental yields, and how do they compare to Sydney and Brisbane?
Melbourne currently offers superior rental yields compared to Sydney and Brisbane, with average apartment yields of 5.60% versus Sydney's 4.64% and Brisbane's 4.29%.
The rental yield advantage is most pronounced for smaller apartments, with Melbourne one-bedroom properties yielding 6.95% compared to 5.38% in Sydney and 4.80% in Brisbane. This reflects Melbourne's more affordable purchase prices combined with strong rental demand.
| Property Type | Melbourne Yield | Sydney Yield | Brisbane Yield |
|---|---|---|---|
| 1-Bedroom Apartment | 6.95% | 5.38% | 4.80% |
| 2-Bedroom Apartment | 6.10% | 5.02% | 4.80% |
| 3-Bedroom Apartment | 3.73% | 4.28% | 3.26% |
| Overall Average | 5.60% | 4.64% | 4.29% |
Melbourne's rental yields are forecast to remain competitive through 2025-2027, supported by tight vacancy rates and continued rent growth. The city's combination of strong rental demand and relatively affordable purchase prices positions it favorably for investors seeking cash flow returns.
It's something we develop in our Australia property pack.
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 presents compelling opportunities for both owner-occupiers and investors in late 2025.
With steady price growth, strong rental yields, and supportive economic conditions, the city is well-positioned for continued appreciation through 2027.
Sources
- Real Estate Australia - Melbourne House Prices
- Property Update - Melbourne Investment
- OpenAgent - Melbourne Property Market
- Real Estate Australia - Melbourne Auction Rates
- Property Update - Rental Vacancy Rates
- Rent.com.au - Rental Market Snapshot
- Real Estate Australia - Melbourne 2026 Forecast
- Australian Bureau of Statistics - Building Approvals
- Global Property Guide - Australian Rental Yields
- MacroTrends - Melbourne Population