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
Are you curious about how Melbourne's real estate market will evolve by 2025? Wondering if now is the right time to invest in a property in this vibrant city? Eager to uncover the trends that could shape your buying decisions?
We will lay down recent insights, ici no guesswork, we rely only on solid data.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Australia Property Pack
1) Melbourne real estate prices will rise significantly due to high demand and limited supply
Melbourne's inner-city apartment market is grappling with persistent oversupply issues in 2023 and 2024.
In the heart of the city, the Central Business District (CBD) saw vacancy rates climb from 3.04% in March 2024 to 3.83% in June 2024. This isn't just a city-center problem; suburbs like Saint Albans, Werribee, and Craigieburn are also feeling the pinch with rising vacancies.
Looking ahead, Melbourne is bracing for a wave of new apartment developments in 2025. The Victorian Government's decision to abolish stamp duty has spurred developers into action, but rising construction costs and financing expenses have slowed down the pace, meaning fewer new homes will be ready in 2024.
The rental market is also under pressure. Rental growth is slowing, and vacancy rates have jumped to 1.9%, marking a 60% increase over the past year. This suggests there's an abundance of rental properties, adding to the challenges for inner-city apartments.
Interestingly, many first-home buyers are showing a preference for suburban living, choosing to buy houses rather than rent in the city. This shift in consumer behavior is another factor contributing to the struggles of the inner-city apartment market.
Sources: Motion Property, Realestate.com.au, Urban.com.au, Property Director
2) Melbourne real estate prices will rise significantly due to high demand and limited supply
Melbourne's inner suburbs are seeing a steady rise in property prices, especially noticeable in 2023 and 2024.
While property values are climbing, rental prices aren't keeping up. In fact, rents have dropped by 1.8% in the last quarter, the biggest dip since the early pandemic days. Even though rents are expected to grow by 4-5% over the next couple of years, this increase is still slower than the rise in property values.
In areas like Melbourne, when property prices outpace rent increases, rental yields tend to decline. This trend is backed by real estate reports showing a widening gap between property prices and rental growth. The shift towards remote work has also led many to move from inner-city apartments to suburban homes, causing higher vacancies and lower rents in the CBD and nearby areas.
Investors are pouring money into high-demand areas, which is pushing property prices even higher. However, this doesn't necessarily mean better returns for landlords, as rental yields are shrinking due to the slower growth in rents.
For those considering buying property in Melbourne's inner suburbs, it's crucial to understand that while property values are on the rise, rental income might not match up. This could impact the overall return on investment, especially if the trend of declining rental yields continues.
As the market evolves, keeping an eye on these dynamics will be key for potential buyers and investors looking to make informed decisions in Melbourne's property scene.
Sources: Motion Property, Motion Property, Domain, KPMG
Everything you need to know is included in our Pack for Melbourne
3) Melbourne's inner suburbs will draw more foreign buyers seeking stable investments
Melbourne's inner suburbs are becoming a hotspot for foreign buyers looking for stable investment opportunities.
In 2025, property prices in areas like Toorak and South Yarra saw impressive growth, with houses gaining $237,486 and $136,311 respectively. This kind of capital growth is exactly what investors are after. The buzz around these suburbs isn't just about numbers; it's about the potential for long-term financial gain.
Foreign investment in Australian real estate is still strong, even with fewer approvals. In less than a year, overseas investors poured $5.3 billion into Australian property. A big chunk of this came from China and Hong Kong, showing that Melbourne's inner suburbs are still on the radar for international buyers.
Melbourne's charm goes beyond just numbers. Known for its high quality of life, the city consistently ranks as one of the most liveable places in the world. This reputation makes it a magnet for foreign buyers who are not just looking for investment but also a great place to live.
The rental market in Melbourne is another draw. With strong demand and good returns, investors see it as a way to secure stable income from their properties. This makes the city even more appealing for those looking to diversify their investment portfolios.
All these factors combined make Melbourne's inner suburbs a prime choice for foreign investors seeking both capital growth and lifestyle benefits.
Sources: Property Update, Ambyy, Hirch Property Group
4) Melbourne real estate prices will rise significantly due to high demand and limited supply
In 2025, rents in Melbourne's inner-city apartments are expected to drop due to an oversupply.
Picture this: Melbourne's vacancy rate jumped to 1.64% in October 2024, a 30% rise from the previous year. This means more empty apartments are sitting around, waiting for tenants. The city is buzzing with construction, with 6,900 apartments being built and 2,300 set to finish soon. This construction boom is flooding the market with new places to live.
Real estate agents are noticing a surge in rental listings, which is adding to the pile of available properties. Media outlets are also talking about the rising vacancy rates and the growing number of empty homes. All these signs point to one thing: there are more apartments than people looking to rent them, which is pushing rents down.
For potential buyers, this could be a golden opportunity. With so many apartments available, landlords are likely to lower rents to attract tenants. This means you might snag a great deal on a city pad. Plus, with the ongoing construction, there are plenty of options to choose from, whether you're looking for something brand new or a bit more established.
Keep an eye on the market trends and vacancy rates. As the supply continues to outstrip demand, rental prices are expected to remain competitive. This is a chance to explore different neighborhoods and find a place that suits your lifestyle and budget.
Sources: Urban Property Australia, PropTrack, Melcorp Real Estate
5) International students will drive up demand for rentals near Melbourne universities
Melbourne is experiencing a surge in international student enrollments at its universities.
In 2023, the University of Melbourne welcomed over 10,400 new international students, and this trend is expected to continue. Even with a proposed cap limiting enrollments to 9,300 by 2025, the demand for rental properties near universities remains strong. International students often choose to live close to their campuses, which naturally drives up demand for nearby accommodations.
Surveys show that international students prioritize proximity to campus when selecting housing. This preference is a key factor in the strong demand for rental properties in university areas. Despite the cap on enrollments, the influx of students continues to put pressure on the housing market.
Melbourne's CBD and Inner-North regions are particularly affected, with a shortage of 15,000-20,000 student beds for those attending the University of Melbourne and RMIT. This shortage, combined with the steady arrival of international students, is causing rental prices to rise and increasing competition for available properties.
For property investors, this situation presents an opportunity. The ongoing demand for student housing near universities means that investing in these areas could be lucrative. With the right property, investors can benefit from the consistent demand and potential for rental income.
As Melbourne continues to attract international students, the city's rental market will likely remain competitive. This trend is expected to persist, making it a prime time for those considering property investments in university precincts.
Sources: Shiksha, Amber Student
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6) Melbourne real estate prices will rise significantly due to high demand and limited supply
Melbourne's property market is feeling the heat as climate change concerns grow.
In recent years, especially in 2023 and 2024, flooding events have become more frequent in Melbourne, putting a spotlight on the city's vulnerability. Melbourne Water's updated flood risk modeling has now placed thousands of inner-city residents in flood zones, leading to higher insurance premiums and a dip in property values.
Insurance companies are reacting by either hiking premiums or outright refusing coverage for homes in these risky areas. If you're a homeowner in a high-risk flood zone, you're likely paying a lot more for flood insurance than those in safer areas. This extra cost is making these properties less appealing to potential buyers.
Government reports are also weighing in, pointing out that climate change is expected to make flooding more frequent and severe. This has caused a shift in what buyers are looking for, with many now more cautious about purchasing in flood-prone neighborhoods. The result? Decreased demand and lower property values in these areas.
Surveys show that buyers are increasingly wary of flood-prone areas, which is understandable given the financial and emotional toll of potential flooding. This caution is reflected in the market, where property values are taking a hit as demand wanes.
Sources: Climate Change Authority, LendingTree, PreventionWeb
7) Melbourne's outer suburbs will see property values rise as urban sprawl pushes development outward
Melbourne's outer suburbs are poised for a boost in property values as urban sprawl pushes development further out.
With the city's population growing, areas like Wollert in the northern corridor are seeing a surge due to their affordability and new infrastructure. This makes them attractive for families and first-home buyers. Wollert is getting new roads, schools, and public transport links, which are essential for supporting the increasing number of residents.
Infrastructure is a game-changer here. Shopping precincts and schools are popping up in Wollert, making it a hot spot for those looking to settle down. Families and first-time buyers are particularly drawn to these developments, as they offer modern amenities and a sense of community.
Affordable housing is a big draw. Suburbs like Wollert and Clyde offer affordable house-and-land packages, which are perfect for those seeking spacious homes without breaking the bank. This trend is not new; historically, property values in expanding urban areas have risen as cities grow outward.
As Melbourne continues to expand, these outer suburbs are becoming increasingly desirable. The combination of new infrastructure and affordable housing options is a winning formula for potential buyers. Families and first-home buyers are flocking to these areas, eager to take advantage of the opportunities they present.
In the coming years, expect these suburbs to continue growing in popularity. The ongoing development and population growth are setting the stage for a vibrant future. Melbourne's outer suburbs are on the rise, and those looking to invest in property should keep a close eye on these areas.
Sources: Melbourne Property Market Outlook 2025, Fast-growing suburbs in Melbourne, Melbourne tipped as a hotspot for 2025 despite poor performance
8) Melbourne real estate prices will rise significantly due to high demand and limited supply
The southeastern suburbs of Melbourne are seeing a drop in investor interest due to less competitive rental yields.
In places like Ringwood and Reservoir, rental yields hover around 3.14% and 3.05%, which isn't particularly enticing for investors. Meanwhile, areas like Caroline Springs and Tarneit offer better returns with yields of 3.4% and 3.7%, drawing more attention from those looking to invest.
Property prices in these southeastern suburbs are climbing, but rents aren't catching up. For example, in Ringwood, while house prices have likely gone up, the rent has only increased by 11.53% annually. This gap makes it tough for investors to see the returns they want.
When you look at other areas, the difference becomes clear. Suburbs like Rochester and Ouyen in Victoria boast rental yields of 8.64% and 8.53%, which are significantly higher. Even within Melbourne, Mickleham offers a more competitive yield of 3.7%, making it a more appealing option.
These numbers show why investors might be turning their backs on the southeastern suburbs. The potential for better returns elsewhere is hard to ignore, especially when comparing these figures.
Sources: Satterley, Property Update, Smart Property Investment
Everything you need to know is included in our Property Investment Pack for Melbourne
9) Melbourne real estate prices will rise significantly due to high demand and limited supply
The bayside suburbs of Melbourne are in high demand because of their lifestyle appeal and limited land availability.
In 2023, areas like Bonbeach, Patterson Lakes, and Parkdale saw property prices soar, with Bonbeach experiencing a 32% increase in median prices. This trend didn't slow down in 2024, showing that interest in these suburbs remains strong.
Rentals are just as hot, with low vacancy rates indicating a strong desire to live in these areas. Whether buying or renting, people are eager to settle here. The competitive market is also evident in the high auction clearance rates, where properties often attract multiple bidders.
Many are drawn to bayside living for the lifestyle, especially young families and professionals who appreciate the beach lifestyle and work-from-home convenience. The scarcity of new land and development opportunities only adds to the allure, keeping these areas exclusive.
Living by the bay offers a unique blend of relaxation and convenience, making it a top choice for those seeking a balanced lifestyle. The limited land means that once you secure a spot, you're part of a select community.
With such strong demand and limited supply, the bayside suburbs of Melbourne are set to remain highly sought after. The combination of lifestyle benefits and exclusivity ensures that these areas will continue to attract interest.
Sources: Smart Property Investment, Motion Property, Soho
10) Melbourne's growing multicultural population will shape the design and location of new housing developments
Melbourne's vibrant multicultural population is reshaping how and where new homes are built.
In 2023, Melbourne's population grew by 167,500 people, largely due to multicultural immigration. This influx is evident as 41.2% of residents were born overseas, with strong communities from India, China, and Vietnam. These groups are not just numbers; they bring unique cultural needs that influence housing designs.
Suburbs like Melton, Wyndham, Hume, and Whittlesea are booming, reflecting this diverse growth. In Greater Dandenong, you can see the ethnic diversity in the form of cultural buildings like temples and mosques. These structures cater to community needs and influence housing designs to include features like prayer rooms and halal kitchens, which are in high demand.
Urban designers are weaving multicultural elements into public spaces to encourage intercultural interactions. Take Eaton Mall, for example, where spaces are designed for multiple uses and languages. This approach is part of a broader strategy to make urban areas more inclusive and welcoming.
Government policies are also stepping up, aiming to provide new homes that meet the needs of a multicultural population. This means ensuring that urban planning is inclusive, with a focus on delivering diverse housing options that cater to different cultural requirements.
Real estate market reports are buzzing about the strong demand for housing driven by this demographic shift. The need for culturally specific amenities is clear, and developers are taking note, offering homes that reflect the rich tapestry of Melbourne's population.
Sources: Wikipedia, University of Melbourne, Motion Property, ABS, Alsocan
11) New government incentives will impact Melbourne's property market for first-time homebuyers
In 2023 and 2024, the Melbourne property market introduced new government incentives to help first-time homebuyers.
One of the standout programs was the Help to Buy Scheme, which offered significant government equity participation. This made it easier for eligible buyers to afford homes, especially when paired with the Victorian First Home Owner Grant. These initiatives provided financial support, making homeownership more accessible for many.
Another key initiative was the Home Guarantee Scheme, allowing first-time buyers to purchase properties with a low deposit and without the burden of Lenders’ Mortgage Insurance. This was a game-changer for many, especially when combined with the First Home Super Saver Scheme, which helped buyers save for a deposit in a high-interest account.
Real estate agents noticed a surge in inquiries from first-time buyers, thanks to increased awareness of these incentives. The media played a crucial role in highlighting the impact of these government programs, leading to more sales of entry-level homes.
Additional government policies, like the reduction in stamp duty for certain properties, further fueled this interest. This made it even more attractive for first-time buyers to enter the market, contributing to a noticeable rise in applications for these grants and schemes.
These incentives have reshaped the landscape for first-time buyers in Melbourne, making it a prime time to consider entering the property market. With the right support, owning a home is now more achievable than ever.
Sources: Noel Jones, Motion Property, Property Update
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12) Demand for large family homes in Melbourne's inner suburbs will drop as smaller households rise
In Melbourne, household sizes are shrinking, changing the housing landscape.
From 2016 to 2021, single-person households rose from 24.6% to 26.4%, and couple-only households increased from 23.4% to 24.5%. This shift means fewer people need large family homes, which were once the norm for bigger families.
With Melbourne's median house price around $921,000, many find large homes out of reach financially. This steep cost nudges buyers toward smaller, more budget-friendly options.
Urban planning, like Plan Melbourne, is pushing for higher-density living to fit the growing population. This strategy encourages the creation of smaller, compact homes, further reducing the need for large family houses.
People now prefer homes that are easy to manage, with amenities like parks and public transport nearby. This trend suits smaller households, who value convenience over space.
Melbourne's aging population typically opts for smaller, low-maintenance homes, which decreases the demand for large family properties.
There's a growing interest in apartments and townhouses in the inner suburbs, offering compact living spaces that appeal to the increasingly common smaller households.
Sources: Property Update, Real Estate, Smart Cities Dive, The Glade Design, Your Investment Property Mag
13) Melbourne real estate prices will rise significantly due to high demand and limited supply
Melbourne's city fringe areas are becoming hotspots for young professionals seeking vibrant, walkable neighborhoods.
With rising property prices in the CBD, many are looking to the fringe for more affordable options. For instance, in 2023, prime face rents in the CBD were about $656 per square meter, while fringe rents were a more budget-friendly $517 per square meter.
Young professionals crave walkable neighborhoods with easy access to amenities like cafes, restaurants, and public transport. The fringe office market is stepping up, offering high-quality buildings and flexible options that cater to this demand.
Urban planning is also a game-changer. Melbourne is embracing the "20-minute city" model, aiming to create areas where residents can meet most of their daily needs within a 20-minute walk, cycle, or public transport trip. This focus on high-quality walking environments and connectivity is making fringe areas more appealing.
Public transport improvements are boosting the allure of these neighborhoods. Melbourne's proposed bus program plans to enhance frequency, coverage, and operating hours, making it easier for fringe residents to commute to the city center. This supports the development of 20-minute neighborhoods by providing reliable transport options.
Sources: JLL, Victoria Walks, Pursuit by The University of Melbourne
14) Melbourne's aging population will boost demand for smaller low-maintenance homes in suburbs
Melbourne's aging population is on the rise, with the number of Australians aged 85 and over expected to double by 2042.
As people get older, they often look for homes that are easier to manage. Many older adults now prefer downsized, low-maintenance living spaces, which was a noticeable trend in 2024. During this time, downsizers and rightsizers were a major force in the new apartment market, seeking homes that fit their retirement budgets.
Suburban areas in Melbourne are catching on to this trend. They're developing properties that cater specifically to older adults. For instance, new developments like GALERIE in Glen Iris and Lori are gaining popularity among those looking to downsize locally. These places offer large apartments and low-maintenance townhouses, perfect for those who want to simplify their living situation.
These suburban developments are not just about smaller spaces; they focus on convenience and community. Older adults are drawn to areas where they can maintain an active lifestyle without the hassle of extensive property upkeep. This shift is reshaping the real estate landscape in Melbourne's suburbs.
Moreover, the demand for these types of properties is expected to grow as the population ages. Developers are increasingly focusing on creating environments that are both accessible and appealing to older residents. This means more options for those looking to downsize without sacrificing comfort or community.
For potential buyers, this trend offers a unique opportunity. Investing in these suburban areas could be a smart move, as the demand for low-maintenance, age-friendly properties is likely to continue rising. Melbourne's suburbs are becoming hotspots for those seeking a simpler, more manageable lifestyle.
Sources: Australian Bureau of Statistics, Urban.com.au, Property Update
Everything you need to know is included in our Real Estate Pack for Melbourne
15) Melbourne real estate prices will rise significantly due to high demand and limited supply
The luxury property market in Melbourne is set to keep growing as more high-net-worth individuals seek exclusive residences.
In Australia, the number of wealthy individuals has jumped by 9% from 2023 to 2024, reaching 690,000. This surge in wealth means more people are on the hunt for luxury homes, pushing up demand in Melbourne.
Even though Melbourne's growth is a bit slower than other cities, it still holds a strong position in the luxury market. The top 5% of premium properties here are priced at $2.51 million, showing that high-end homes are in demand. Banks like NAB and Westpac are predicting a slight recovery, with house prices expected to rise in 2025.
Melbourne is buzzing with new high-end residential projects in prime locations. These developments often feature work by renowned architects and designers, making them irresistible to affluent buyers. The media frequently highlights Melbourne as a top luxury property destination, which only adds to the interest and demand.
Sources: Smart Property Investment, Money Management, OpenAgent
16) Melbourne's western suburbs properties will become more attractive as infrastructure projects improve connectivity
Melbourne's western suburbs are becoming a hot spot for property buyers due to planned infrastructure projects that promise better connectivity.
In recent years, the government has poured resources into projects like the Western Roads Upgrade, which aims to transform the road network by widening roads and upgrading intersections. This means less traffic and easier commutes for everyone.
Another game-changer is the Suburban Rail Loop, a 90km circular line with 12 new underground stations. It's designed to handle 400,000 passengers daily, making it a breeze to get around the city.
These improvements in public transport are making the western suburbs more appealing to both homebuyers and businesses. Areas like Melton and Brimbank are already seeing notable price increases as demand grows.
In FY 2024, property sales in these areas jumped by 10.8% compared to the previous year, showing just how much interest is building.
Sources: Western Roads Upgrade, Melbourne West Population Forecast, Real Estate Market Trends, Future Developments for Melbourne
17) Melbourne real estate prices will rise significantly due to high demand and limited supply
Melbourne's northern suburbs are gaining popularity due to increased investment in infrastructure.
Projects like the North East Link and the Melbourne Airport Rail are not just about better roads and trains; they’re creating thousands of jobs and making it easier to get around. This means more people are considering moving to these areas because commuting is becoming a breeze.
The population in these suburbs is on the rise, with a projected increase of 67% from 2021 to 2046. This boom is drawing in businesses and services, making the area even more attractive for new residents who want everything close by.
Exciting plans for new cultural and recreational spots are in the works, promising to boost the quality of life for those living there. Imagine having more parks, galleries, and community centers right at your doorstep.
These developments are strategically placed near jobs, amenities, and transport, ensuring that new housing is well-connected. This thoughtful planning is a big draw for anyone looking to buy property in the area.
Media and social media are buzzing about the lifestyle perks of the northern suburbs, adding to their charm. With all these changes, the area is set to become a hotspot for future homeowners.
Sources: ID Consulting, Suburban Development Victoria, Realestate.com.au
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18) Melbourne real estate prices will rise significantly due to high demand and limited supply
Virtual reality tours are changing how properties are marketed and sold in Melbourne.
Back in 2023 and 2024, the global VR in real estate market was on a fast track, with expectations to hit USD 3,161.2 million by 2025. This boom was largely due to the growing use of VR technology, especially in the Asia Pacific region, which was seeing a projected growth rate of 25% from 2019 to 2025. Buyers were clearly leaning towards virtual tours over the old-school methods.
Surveys from those years showed that 67% of home buyers wanted virtual tours when checking out listings, and half of them preferred these tours over just photos. This shift in preference led to more engagement, with listings that had virtual tours getting 87% more views and potential buyers spending significantly more time on these sites.
The effect on sales was clear. Properties with virtual tours sold for 9% more on average and closed 31% faster than those without. This not only cut down the time properties spent on the market but also made the sales process more efficient. Real estate agents noted that 90% of prospective buyers were more likely to buy if a property included a virtual tour.
Additionally, 25% of sellers preferred agents who used this technology, showing a shift in how sellers wanted their properties marketed. The convenience and immersive experience of virtual tours are making them a must-have in the real estate world.
Sources: Rocket Driver, PhotoUp, Market.us
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.