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 the future of Melbourne's property market? Wondering which trends will shape your buying decisions in 2025? Eager to discover the key factors that could influence property values?
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) Chinese buyers will increasingly seek stable investment opportunities in Melbourne real estate
In 2023, Chinese investors poured $700 million into Australian residential properties in just one quarter.
Melbourne is a hotspot for these investors, thanks to its stable property market growth and favorable exchange rates. This city offers a secure investment environment, which is exactly what Chinese buyers are looking for.
The economic situation in China is pushing capital outwards. With challenges like a property sector crisis, Chinese investors are seeking stable markets abroad, and Melbourne fits the bill perfectly.
Melbourne's cultural diversity and established Chinese community make it even more appealing. This community provides a supportive network that eases the investment process, adding to the city's attractiveness.
Chinese buyers are drawn to Melbourne not just for its economic stability but also for its vibrant lifestyle. The city offers a mix of cultural experiences and amenities that resonate well with Chinese investors.
As the demand from Chinese buyers continues to rise, Melbourne's property market is expected to see further growth, driven by these stable investment opportunities.
Sources: Prime Capital, Property Update, China Daily HK, Property Update
2) Government incentives will boost foreign investment in Melbourne's residential market
Government incentives are drawing foreign buyers to Melbourne's real estate market.
Recently, the Australian Government has rolled out tax breaks to boost housing supply. For example, they've slashed the withholding tax rate for certain fund payments from managed investment trusts (MIT) tied to residential build-to-rent projects from 30% to 15%. This is a big deal for investors eyeing Melbourne's property scene.
Come January 2025, foreign residents from countries that share tax information with Australia will enjoy a final MIT withholding tax rate of 15% on income and gains from residential properties, including build-to-rent ventures. This change is set to make Melbourne's real estate market even more attractive to international investors.
Looking back, similar incentives have sparked surges in foreign investment. In the 2022-23 financial year, foreign buyers snapped up a notable number of homes in Australia, with Melbourne being a hot spot. This shows a strong interest from overseas investors, which these new incentives are likely to amplify.
Melbourne's appeal isn't just about numbers; it's a city known for its vibrant culture and livability. With these tax incentives, foreign investors have more reasons to consider Melbourne as a prime location for property investment.
These government measures are not just about boosting the housing market; they're about making Melbourne a more accessible and lucrative option for foreign buyers. Expect to see more international interest in Melbourne's real estate as these incentives take effect.
Sources: ATO, Australian Property Update, Alvarez & Marsal, Global Property Guide
Everything you need to know is included in our Real Estate Pack for Melbourne
3) Rents in top school zones will keep rising as families focus on education
In 2023 and 2024, Melbourne's rental prices in high-demand school zones have surged.
Families are keen on securing top-notch education for their kids, and they're ready to pay extra for it. In fact, buyers are shelling out up to 26% more for homes in top primary school areas and 11% more for high-ranked high school zones. This eagerness to invest in education is pushing rental prices up.
Melbourne stands out because both primary and secondary schools are driving property price growth. The Domain School Zones Report from 2023 shows that families want a smooth educational path from primary to secondary school, which is why these areas are in such high demand.
People are even moving just to get into these better school zones, which is hiking up the rents. The media keeps highlighting how crucial school zones are in property choices, making it clear that education is a top priority for many families.
Melbourne's rental vacancy rates in these school zones were just 1.3% in June 2023, much lower than in Sydney and Canberra. This low vacancy rate shows just how hot the demand is for rentals in these areas.
With families prioritizing education, rents in high-demand school zones will continue to rise as they seek the best for their children.
Sources: AHURI, Find a Mover, Longview Blog
4) Rents will rise in areas with new lifestyle amenities as they become more desirable
Rents are rising in areas with new lifestyle amenities because these places are becoming more desirable.
Take Carnegie, for instance. In 2023 and 2024, this suburb saw steady growth thanks to its excellent schools, easy access to public transport, and a lively dining scene. These features make it a magnet for families and young professionals, which in turn drives up rental prices.
In Inner Melbourne, unit rents have jumped by 17.6%, far outpacing the 4.5% increase in house rents. This shows that areas with new lifestyle amenities are in high demand, pushing rental prices higher. The Middle Ring Eastern Suburbs are also seeing this trend, with gentrification and infrastructure upgrades making them attractive to those seeking affordability compared to inner suburbs.
People really want to live near lifestyle amenities. A survey by Realestate.com.au found that many first-home buyers are choosing to buy houses to stop renting, indicating that lifestyle amenities are a big deal in property decisions. This preference can lead to higher rents in areas rich with amenities.
Real estate market reports back this up. Kay & Burton's analysis highlights a strong demand for well-located quality homes, thanks to the presence of lifestyle amenities. This demand is a key factor in the rising rents in these areas.
Sources: Collings, Kay & Burton, Property Update
5) Demand will drop in eastern suburbs as younger buyers choose cheaper options in the north and west
Property demand in Melbourne is shifting as buyers look for more affordable options.
According to the Victorian Property Sales Report from March 2024, fewer suburbs in metropolitan Melbourne saw a rise in median house prices compared to the previous quarter. This trend suggests that many buyers are now eyeing the more budget-friendly areas in the north and west.
In the eastern suburbs, house prices are generally higher. For instance, Moonee Ponds has a median house price of $1,500,000, while Mitcham's is $1,050,000. On the flip side, Melton South in the west offers a median price of just $465,000, making it a hotspot for those watching their wallets.
Demographic insights add another layer to this trend. The average age in Mitcham is 40-49, which might not be as appealing to younger buyers. Meanwhile, Moonee Ponds attracts a younger crowd with an average age of 38, showing a shift towards these regions.
The Helia Home Buyer Sentiment Report 2024 reveals that 55% of home buyers in Melbourne are interested in more affordable apartments or townhouses, often found in the north and west. This aligns with the growing demand for budget-friendly living spaces.
Sources: Victorian Property Sales Report, Helia Home Buyer Sentiment Report 2024
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6) Stamp duty changes will block first-time buyers from entering the Melbourne market
Changes in stamp duty policies can significantly impact first-time buyers' ability to enter the housing market.
Back in 2020-2021, the Victorian government offered a 50% duty waiver for first-home buyers, and suddenly, more people were jumping into the market. This shows that when stamp duty goes down, buying a home becomes a lot more doable for newcomers.
First-time buyers are usually on a tight budget, and stamp duty is a big upfront cost. When it's reduced, affordability improves, making it easier for them to take the leap. Real estate agents in Melbourne have noticed that when these policies change, there's a spike in activity among first-time buyers because their initial costs drop.
Economists often point out that stamp duty is a major hurdle for first-time buyers. They believe that cutting or removing stamp duty can boost the housing market by making homes more accessible for new buyers. This idea is backed by models predicting that lower stamp duty rates lead to more first-time buyers entering the market.
In Melbourne, real estate agents have seen firsthand how these policy shifts can energize the market. When first-time buyers face lower initial costs, they are more likely to make a move, which can have a ripple effect throughout the housing sector.
So, if you're thinking about buying your first home, keep an eye on stamp duty changes. They could be the key to making your dream home a reality.
Sources: SRO Victoria, Tembo Money, Melbourne Institute
7) Interest in large family homes will drop as smaller households become the norm
In Melbourne, household sizes are shrinking.
More people are opting for smaller living arrangements, with single-person and couple-only households on the rise. In 2021, almost a quarter of households in Greater Melbourne were single-person, and over 31% were two-person households. This shift means less demand for large family homes.
High property prices are a big factor too. With the median house price at $921,000, many buyers are priced out of larger homes, turning instead to more affordable options like apartments and townhouses.
Urban planning is also nudging people towards smaller homes. There's a push for higher-density living to handle Melbourne's growing population. Many folks prefer smaller, easier-to-manage homes, especially as the population ages and needs change.
These trends are reshaping the housing market. As more people live alone or in pairs, the appeal of large family homes is fading. This is a significant shift in how people choose to live in Melbourne.
Sources: Profile ID, Real Estate News, Smart Cities Dive
8) Northern suburbs will become popular due to their affordability and closeness to the city
In Melbourne, central property prices have soared, pushing buyers to explore the northern suburbs.
Take Pascoe Vale, for instance, which is just nine kilometers from the CBD. Here, homes are more affordable compared to other nearby areas. This makes it a popular choice for those wanting to stay close to the city without breaking the bank.
The northern suburbs are not just about affordability; they’re also seeing major improvements in public transport. Thanks to the Northern Councils Alliance, there are plans to enhance services like the Upfield rail line and bus networks, making commuting easier.
Suburbs like Reservoir are catching the eye of buyers due to gentrification. With a mix of old and new homes, these areas are becoming hot spots for those looking to invest. The demand is driven by owner-occupiers and ongoing infrastructure upgrades.
SmartBuses are another perk, offering better east-west connectivity in these suburbs. This makes daily travel more convenient, adding to the appeal of living in the north.
Experts are predicting that property prices will continue to rise in these areas, thanks to the combination of demand and development. This trend is making the northern suburbs a smart choice for potential buyers.
Sources: Property Update, Bus News, Mortgage Choice, Savings.com.au
Everything you need to know is included in our Property Pack for Melbourne
9) An aging population will boost demand for smaller homes in well-serviced areas
Melbourne's population is getting older, with the median age projected to rise to 39.8 years by 2033-34.
Many Baby Boomers are reaching retirement and are keen to downsize, especially in areas like Portarlington and Mornington, known for their affordability and access to amenities. It's not just about smaller homes; they want places that are easier to manage and closer to essential services.
Older adults often prefer smaller, low-maintenance homes. Downsizing offers benefits like less time on upkeep and lower maintenance costs, making it appealing to seniors, according to the Australian Housing and Urban Research Institute.
Seniors also want to live near healthcare and public transport, which is why retirement villages and age-friendly apartments are popping up in Melbourne. These options cater to the needs of an aging population, offering convenience and accessibility.
In these areas, the demand for downsized living options is growing, driven by the desire for proximity to healthcare and public transport. This trend is reshaping the housing market, with more developments focusing on these needs.
As the population ages, the demand for well-serviced, downsized living options will continue to rise, making these areas increasingly attractive for retirees.
Sources: Real Estate, AHURI, Population Statement
10) High walkability suburbs will become more desirable as people prioritize convenience and lifestyle
Suburbs with high walkability scores are becoming the new hotspots for property buyers.
Take South Yarra (East), for example, where property values are soaring thanks to its excellent walkability and proximity to jobs and local amenities. This trend is not just a flash in the pan; it's expected to continue, with each point of Walk Score potentially adding $3,250 to a home's value. It's no wonder these areas are seen as attractive investments.
Real estate experts are buzzing about the growing demand for homes in walkable areas. Suburbs like Pascoe Vale are catching eyes for their easy access to the city and walkability, making them appealing to both first-time buyers and families. Consumer surveys back this up, showing a clear preference for walkable neighborhoods. Many of these high-yielding suburbs are even making it to the 2025 Hot 100 list, signaling strong investment potential.
Living in a walkable community isn't just about convenience; it's about a better quality of life. These areas naturally encourage exercise, which can help reduce the risk of obesity and heart disease. This has become especially important in Melbourne, where the shift towards walkability picked up speed after the COVID-19 lockdowns. Plus, walkable neighborhoods support local businesses and cut down on carbon emissions, making life better for everyone.
Sources: Savings.com.au, Realestate.com.au, Connected World
11) Outer suburbs like Wyndham and Melton will see a surge in demand as remote work lets people live farther out
Remote work is reshaping where Australians choose to live.
With more people working from home, outer suburbs like Wyndham and Melton are gaining popularity. These areas offer more space and a better quality of life, which is a big draw for those who no longer need to be close to the city center. The shift started around 2023 and 2024 when many Australians wanted to keep working remotely even after pandemic restrictions eased.
One reason for this trend is the rising property prices in inner Melbourne. Over the last five years, house values in the city have gone up by 8.2%, while outer suburbs saw a 12.9% increase. This shows that people are moving further out to find more affordable homes. Plus, the cost of living is generally lower in these areas, making them even more attractive for remote workers.
Improved infrastructure and transport links are also boosting interest in these suburbs. Wyndham and Melton have seen significant development in transport options, making it easier for residents to travel when they need to. This, along with more amenities and services, makes these areas appealing for those seeking a balanced lifestyle.
For those considering a move, it's worth noting that living costs in outer suburbs can be up to $16k less compared to inner-city areas. This financial benefit is a key factor for many remote workers who are looking to maximize their quality of life without the daily commute.
As remote work becomes more common, the trend of moving to outer suburbs is expected to continue. People are increasingly valuing space and affordability over proximity to the city, and suburbs like Wyndham and Melton are perfectly positioned to meet these needs.
Sources: Hybrid Work Opportunities in Regional Victoria Final Report, Melbourne: Outer suburbs house owners slugged with up to $16k in living costs compared to inner-city dwellers, The Rise of Remote Work in Australia: Trends, Jobs, and Top Employers
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12) Demand for beachside suburbs will surge as people prefer coastal living
Beachside suburbs are becoming increasingly popular as more people seek the coastal lifestyle.
In 2023, suburbs like Bonbeach, Parkdale, and Patterson Lakes in Melbourne saw property prices soar, with increases ranging from 19.5% to 32%. This surge in prices is a clear sign of the growing demand for homes by the sea. The allure of coastal living is drawing in buyers who are willing to pay a premium for the lifestyle benefits these areas offer.
Another telling sign of this trend is the 30% drop in the number of properties for sale in Bayside suburbs compared to 2021. This decrease indicates that homes are being snapped up quickly, with eager buyers ready to make a move. Real estate agents are witnessing large crowds at home inspections and competitive bidding at auctions, underscoring the high demand.
Millennials, in particular, are driving this shift towards coastal living. They are looking for areas that offer walkability, access to public transport, and lifestyle amenities, which are often more abundant in beachside suburbs. This generation values convenience and a vibrant community, making coastal areas an attractive option.
Consumer surveys reveal that millennials are not just dreaming of the beach; they are actively making it their home. The desire for a relaxed, yet connected lifestyle is pushing more people to consider beachside suburbs as their top choice. The trend is reshaping the real estate market, with coastal areas becoming hotspots for new buyers.
As lifestyle preferences continue to evolve, the demand for beachside living is expected to grow even further. The combination of natural beauty, community feel, and modern conveniences makes these suburbs highly desirable. This shift is not just a passing fad; it's a significant change in how people want to live.
Sources: Smart Property Investment, Collings Real Estate
13) Melbourne's luxury property market will decline as buyers focus on prices
The luxury property market in Melbourne is seeing a shift as buyers become more price-sensitive.
High interest rates have been a major factor, making it costlier to finance luxury homes. Even with hopes for rate cuts in 2025, the past years' high rates have left a mark. This has made potential buyers think twice before diving into the luxury market.
Changes in property taxes and levies have also played a role, making owning luxury properties less appealing. These regulatory changes have acted like a brake on the market, discouraging potential buyers. People are now more focused on affordability, which is a big shift from the past when luxury was the main draw.
The Domain End of Year Wrap 2024 report showed that Melbourne’s luxury market had slow growth. Some properties even sold for less than their original purchase price, a clear sign that buyers are cautious. This trend is making sellers rethink their pricing strategies.
Luxury homes are also taking longer to sell, which indicates a decrease in demand. Buyers are not as willing to pay top dollar as they used to be. This is a significant change from the past when luxury properties would fly off the market.
Overall, the market is adjusting to these new realities, and buyers are more cautious about where they put their money. The days of quick sales and high prices seem to be on pause for now.
Sources: Domain, Realestate.com.au
14) Western suburbs will boom with major infrastructure investments and new housing developments
The western suburbs are becoming a hot spot for property buyers, thanks to major infrastructure investments and new housing developments.
In 2023 and 2024, the Australian government is pouring $1.2 billion into infrastructure projects specifically for these suburbs. This means better roads, improved public transport, and enhanced essential services, making life easier and more convenient for residents.
The Melbourne West region is buzzing with growth. The population is expected to jump from 863,956 in 2021 to around 1.47 million by 2046. This surge is sparking the creation of new housing estates and community facilities, especially in areas like Rockbank - Mount Cottrell and Cobblebank - Strathtulloh, designed to offer modern amenities and a better quality of life.
Property values in the western suburbs are on the rise, driven by the area's affordability and strategic location. As infrastructure gets better and new amenities pop up, more people are keen to move here, making these suburbs even more appealing.
For those looking to invest, the western suburbs offer high investment prospects. The combination of government spending and population growth is creating a vibrant real estate market, with plenty of opportunities for buyers and investors alike.
With all these developments, the western suburbs are set to become a prime destination for homebuyers seeking a blend of convenience, modern living, and investment potential.
Sources: Australian Infrastructure Budget Monitor 2024-25, Melbourne West Forecast Review, Real Estate Expert Predictions
Everything you need to know is included in our Pack for Melbourne
15) Environmental rules will boost demand for energy-efficient homes in Melbourne
Environmental regulations are reshaping the housing market in Melbourne, making energy-efficient homes more desirable.
In 2023 and 2024, the Victorian government rolled out new rules that require new homes to meet a 7-star energy rating under the Nationwide House Energy Rating Scheme (NatHERS). This move is part of a larger effort to cut down on energy use and aligns with updates to the National Construction Code, which now demands better thermal performance for residential buildings.
To sweeten the deal, the government has put some serious money on the table. The Australian Government has committed $1.3 billion for energy-saving upgrades across homes, businesses, and social housing. Plus, the 2023 Federal budget has set aside $1 billion for low-interest loans to help homeowners make their properties more energy-efficient.
People are catching on to the benefits of energy-efficient homes. A survey found that 68% of Australians now prioritize energy efficiency ratings when buying, renting, or building a property. This shift in consumer preference is partly due to increased media coverage and a growing awareness of sustainable living.
Real estate marketing is also riding this wave, with a stronger focus on sustainability. The buzz around energy-efficient homes is not just about saving on bills; it's about contributing to a greener future.
Sources: Real Estate, VBA, RACE for 2030
16) Virtual reality tours will be essential for property viewings enhancing the buying experience
Virtual reality tours are now a must-have for property viewings, making the buying process much more engaging.
Imagine browsing homes from your couch; that's what VR tours offer. Over half of adults have tried a virtual tour, and a whopping 67% of home buyers actually prefer listings that include them. Young adults, especially those aged 18 to 34, are really into this tech. They're 130% more likely to book a property if it has a virtual tour. It's like having a personal open house anytime you want.
These tours aren't just a gimmick; they really work. Listings with virtual tours get 87% more views, and people spend 5-10 times longer on these sites. It's like the difference between flipping through a magazine and diving into a good book. The tech behind these tours has gotten a lot better, too. Thanks to AI and machine learning, VR tours are now more immersive and interactive, making them feel almost like the real thing.
For real estate agents, this is a game-changer. Virtual tours have cut down on wasted viewings by 40%, which means less time spent on properties that aren't a good fit. Agencies are seeing more engagement, with bookings and conversion rates jumping by 16% to 67%. It's like having a 24/7 open house that never closes.
And let's not forget the financial side. The global market value of VR in real estate is on the rise, projected to hit $2.6 billion by 2025. Back in 2023, VR tech was already dominating the market with a 43.9% share. This isn't just a trend; it's the future of real estate.
Sources: HackerNoon, EzRealEstateTools, PhotoUp, OmnivistaPro, Market.us
17) New bike lanes and pathways will skyrocket property demand in areas promoting active lifestyles
New bike lanes and pedestrian pathways are making neighborhoods more attractive to potential property buyers.
Take Melbourne, for example. The city’s bike lane projects, like those on Exhibition Street, have not only reduced crashes by 46% but also increased bike traffic by 22%. This makes the area safer and more appealing for those who love to cycle or walk.
People are increasingly looking for homes in areas that support an active lifestyle. The Victorian Government's push for better active transport links is drawing more folks to hop on their bikes, offering a healthy and sustainable way to get around.
These new pathways are not just about getting from A to B; they’re boosting local economies too. The St Kilda Road bike lanes, for instance, are expected to make the area more vibrant by increasing foot traffic and business activity.
Real estate agents are noticing this trend. They report that buyers are keen on neighborhoods with these active lifestyle amenities, which is driving up interest in properties nearby.
So, if you’re thinking about buying property, consider areas with these new infrastructures. They’re not just about convenience; they’re about creating a community that values health and sustainability.
Sources: Bicycle Network, City of Melbourne Bike Lane Design Guidelines, Victorian Government
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18) New apartment-heavy suburbs will face oversupply issues impacting property values
In 2023 and 2024, Melbourne experienced a surge in new apartment developments, especially in certain suburbs.
This boom has sparked worries about oversupply affecting property values. When too many new apartments pop up in one area, it often leads to higher vacancy rates, meaning more empty apartments because there aren't enough renters.
Take Melbourne's rental scene: while the citywide vacancy rate was a low 1.2%, areas with a lot of new apartments likely saw much higher rates. This is a clear indicator of oversupply. In suburbs like Notting Hill, where new apartments are plentiful, rental yields have dropped to 6.9%. This drop happens because landlords are competing fiercely to attract tenants, which can push rental prices down.
Reports from 2023 and 2024 also highlighted that some new apartment projects had unsold units lingering on the market. This often forces developers to cut prices to lure buyers, further impacting property values. Looking at similar markets like Brisbane and Perth, oversupply has historically led to price stagnation or decline, negatively affecting property values.
In these suburbs, the concentration of new developments is a double-edged sword. While it offers more housing options, it also risks creating a market where supply outstrips demand, leading to potential financial pitfalls for property investors.
Sources: API Magazine, Property Update, Aus Property Professionals
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.