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Yes, the analysis of Melbourne's property market is included in our pack
Melbourne's property market presents a compelling investment opportunity with median prices recovering after recent adjustments.
As of September 2025, the Melbourne residential property market shows signs of stabilization with modest growth returning after a challenging period, offering both opportunities and considerations for potential buyers.
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Melbourne property prices have stabilized after declining in 2024, with median house prices at $939,965 and units at $614,689 as of May 2025.
Interest rate cuts from 4.35% to 3.85% have improved affordability and reignited buyer activity across the city.
| Property Type | Median Price (May 2025) | 12-Month Change | 3-Month Growth |
|---|---|---|---|
| All Dwellings | $791,303 | -1.2% | +1.2% |
| Houses | $939,965 | -1.0% | +1.8% |
| Units | $614,689 | -1.6% | +3.5% |
| Rental Yields (Houses) | 2.5%-3.5% | - | - |
| Rental Yields (Units) | 3.5%-4.5% | - | - |
How much does property cost right now in Melbourne by suburb and type?
Melbourne property prices vary significantly across suburbs and property types as of September 2025.
The median price for all dwellings in Melbourne sits at $791,303, with houses commanding $939,965 and units averaging $614,689.
Several suburbs offer properties below the median house price, including Braybrook at $760,000, Laverton at $572,500, Meadow Heights at $570,000, and Doveton at $560,000. These areas present opportunities for buyers seeking more affordable entry points into the Melbourne market.
For unit buyers, suburbs like West Footscray ($560,000), Kensington ($535,000), St Kilda West ($495,000), Craigieburn ($427,000), and Kingsbury ($445,500) offer options below the median unit price.
Premium areas and central locations remain well above these median figures, with some suburbs commanding prices significantly higher than the city-wide averages.
What has been the recent trend in Melbourne property prices over the past year?
Melbourne property prices have shown signs of recovery after a challenging period from mid-2024 to mid-2025.
While annual figures show a modest decline of 1.2% for all dwellings, recent quarterly data reveals positive momentum with a 1.2% increase over three months and 0.4% growth in May 2025 alone.
Houses experienced a 1.0% annual decline but are now trending upward with 1.8% growth over 12 months, while units saw a smaller annual drop of 1.6% but demonstrated stronger recent performance with 3.5% growth over the same period.
The stabilization and recovery began in early 2025, coinciding with interest rate cuts and improved market sentiment.
This turnaround reflects buyers returning to the market as borrowing conditions improved and confidence returned to the Melbourne residential sector.
What are the medium-term price projections for Melbourne property over the next 3-5 years?
Major financial institutions predict moderate growth for Melbourne property over the next 3-5 years.
For 2025, Westpac forecasts 2.0% house price growth, NAB predicts 2.3%, ANZ projects 5.5%, and KPMG estimates 3.3% growth for the Melbourne market.
By 2026, industry forecasts suggest the median house price could reach approximately $1.1 million, with unit prices expected to reach around $584,000.
Capital growth is expected to be steady but slower than the explosive growth seen in previous decades, reflecting improved affordability conditions and sustained immigration-driven demand.
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What is the long-term outlook for Melbourne property over the next 10-15 years?
Melbourne's long-term property outlook remains fundamentally positive, supported by strong demographic and economic drivers.
Over the past decade, Melbourne house prices have nearly doubled with a 96.15% increase, while unit values have shown more moderate but consistent growth.
Continued robust population growth driven by immigration, significant infrastructure investment, and constrained new housing supply are expected to underpin long-term value appreciation across the Melbourne market.
However, higher state taxes and policy costs may temper growth rates compared to the explosive gains of the 2010s.
Expect long-term Melbourne property to outperform inflation with moderate average annual gains, providing steady wealth building opportunities for patient investors and homeowners.
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How do rental yields compare across Melbourne areas and property types?
Rental yields in Melbourne vary significantly by location and property type, with units generally offering higher returns than houses.
Houses typically deliver rental yields between 2.5% and 3.5%, while units commonly achieve yields of 3.5% to 4.5% across the Melbourne market.
Inner suburbs generally provide lower yields due to higher property prices, while outer suburbs and certain unit developments often deliver more attractive rental returns for investors.
Investor hotspots for units include Kew with a median of $848,098, Doncaster East at $856,240, Carnegie at $645,017, Pascoe Vale at $661,352, and Springvale at $560,074.
These areas combine reasonable purchase prices with strong rental demand, making them attractive for buy-to-let strategies in the Melbourne market.
What are vacancy rates in key Melbourne suburbs and how do they affect investment potential?
Vacancy rates remain low in many key inner and middle-ring Melbourne suburbs, supporting rental growth and investor returns.
Low vacancy rates in established suburbs create competitive rental markets, allowing landlords to achieve better rental yields and more consistent occupancy.
However, some CBD and fringe areas experience higher vacancy rates due to oversupply, particularly in high-density apartment developments built during the construction boom.
Areas with higher vacancy can dampen rental returns and limit capital growth potential, making careful suburb selection crucial for investment success.
The combination of low vacancy and strong rental demand in well-located suburbs makes these areas particularly attractive for Melbourne property investors seeking reliable income streams.
How have interest rates and borrowing conditions changed recently in Melbourne?
Interest rates peaked at 4.35% before being cut twice in 2025, now sitting at 3.85%, significantly improving affordability for Melbourne property buyers.
These rate cuts have reignited buyer activity across the Melbourne market and started to ease affordability constraints that limited buyer participation in 2024.
Lending criteria remain strict with banks maintaining conservative serviceability assessments, but falling rates are gradually improving borrowing capacity for qualified buyers.
The improved borrowing environment has contributed to the recent stabilization and growth in Melbourne property prices, with more buyers able to enter the market.
Further rate reductions could continue to boost affordability and buyer activity, supporting continued recovery in the Melbourne residential market.
What government policies currently affect Melbourne property buying and selling?
Several government policies significantly impact Melbourne property transactions and investment returns.
Stamp duty remains a major cost for buyers, with recent increases in land tax rates particularly affecting higher-value properties and investor budgets.
Foreign buyer surcharges add additional costs for overseas purchasers, while first-home buyer incentives and targeted support for new builds help local buyers enter the market.
Ongoing government programs provide targeted affordability support for owner-occupiers, helping to maintain buyer participation in the Melbourne market.
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Which Melbourne suburbs show the strongest growth and which are stagnating?
Several Melbourne suburbs are demonstrating strong capital growth performance and future potential.
Suburbs showing strong recent and expected growth include Kew, Doncaster East, Carnegie, Pascoe Vale, and Springvale, which are mostly well-connected middle-ring or gentrifying locations.
These areas benefit from good transport links, established amenities, and increasing demand from both owner-occupiers and investors seeking value in the Melbourne market.
Stagnating areas typically include older, oversupplied CBD apartment zones and certain outer suburbs with limited amenities or high resident turnover.
The strongest performing suburbs combine accessibility, lifestyle amenities, and reasonable entry prices, making them attractive to a broad range of buyers in the current Melbourne market.
What budget ranges are needed to buy in different Melbourne areas?
| Area/Suburb | Median House Price | Median Unit Price |
|---|---|---|
| Braybrook | $760,000 | - |
| Laverton | $572,500 | - |
| Bellfield | $930,000 | - |
| Meadow Heights | $570,000 | - |
| Doveton | $560,000 | - |
| West Footscray | - | $560,000 |
| Kensington | - | $535,000 |
| St Kilda West | - | $495,000 |
| Craigieburn | - | $427,000 |
| Kingsbury | - | $445,500 |
Which Melbourne areas offer the best balance for owner-occupiers?
Several Melbourne suburbs offer excellent value propositions for owner-occupiers seeking affordability, lifestyle, and long-term growth potential.
Suburbs like Braybrook, Laverton, and St Kilda West provide good value below the city median while offering reasonable access to Melbourne's CBD and amenities.
Parts of Melbourne's west and north offer established family-friendly environments that blend affordability with convenient commuting access to employment centers.
These areas typically feature established infrastructure, schools, and community facilities while remaining accessible to first-time buyers and growing families.
The key is finding suburbs that offer a combination of reasonable purchase prices, lifestyle amenities, and strong long-term growth fundamentals in the Melbourne market.
Which Melbourne properties and locations offer the best investment returns?
Melbourne investment success depends on choosing the right property type and location combination for optimal returns.
1. **Small unit blocks in desirable suburbs** - Properties in Kew, Carnegie, and Springvale often provide better yields and capital growth than CBD apartments2. **Well-connected middle-ring locations** - Areas with good transport links and established amenities attract consistent tenant demand3. **Family houses in growth corridors** - Properties in gentrifying areas deliver strong long-term value and rental appeal4. **Established suburbs with low vacancy** - Areas with tight rental markets support consistent income and capital growth5. **Properties below median in emerging areas** - Suburbs showing early signs of gentrification offer significant upside potentialSmall blocks of units in desirable, well-connected suburbs typically outperform high-density towers or oversupplied CBD apartments for both yields and capital appreciation.
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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 shows clear signs of recovery with improving affordability and renewed buyer confidence.
Strategic buyers can find opportunities across different price points, from affordable outer suburbs to growth-focused middle-ring areas.
Sources
- OpenAgent Melbourne Property Market
- Property Update Australia House Prices
- InvestSmart Property Price Forecast
- Property Buyer Melbourne Prices by Suburb
- Smart Property Investment Growth Forecast
- RealEstate.com.au Melbourne Suburbs Analysis
- Property Update Melbourne Investment
- Mitchell Torre Market Update