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 has delivered moderate growth over the past decade, with significant variations between different periods. The city has experienced both boom periods and market corrections, making it essential to understand the complete picture before making investment decisions.
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 average annual property growth rate has been 3.4% over the last 10 years and 1.8% over the last 5 years, with the most recent 12 months showing only 0.5% growth.
The city has underperformed compared to Sydney (5.9% annually) and the national average (5.3% annually), with only select areas doubling in value over the decade.
| Time Period | Average Annual Growth Rate | Key Market Events |
|---|---|---|
| Last 10 years (2014-2024) | 3.4% per annum | Mixed cycles with COVID boom and correction |
| Last 5 years (2019-2024) | 1.8% per annum | COVID impact followed by correction |
| Last 12 months (2023-2024) | 0.5% | Market slowdown and modest declines |
| Best year (2021) | 17% | COVID-driven property boom |
| Worst year (2024) | -3.0% | Interest rate impacts and correction |
| Projected next 5 years | 3-4% per annum | Moderate growth expected |
| Current median price (2024) | $791,303 | Houses: $952,339 |
What has been the average annual property growth rate in Melbourne over the last 10 years?
Melbourne's average annual property growth rate over the last 10 years has been 3.4% per annum.
This growth rate represents a decade-long average that includes both significant boom periods and market corrections. The calculation covers the period from 2014 to 2024, encompassing various market cycles including the pre-COVID steady growth, the pandemic-driven boom, and the subsequent market correction.
The 3.4% annual average places Melbourne below Australia's major city average and significantly behind Sydney's performance during the same period. This moderate growth rate reflects Melbourne's position as a mature property market that experiences less volatility than some other Australian capitals but also delivers more conservative returns.
It's important to note that this average masks significant year-to-year variations, with some years seeing double-digit growth while others experienced declines. The 10-year average provides a smoothed perspective that helps investors understand long-term trends rather than short-term fluctuations.
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What was the average annual growth rate in Melbourne during the last 5 years?
Melbourne's average annual property growth rate over the last 5 years has been 1.8% per annum.
This lower growth rate compared to the 10-year average reflects the challenging market conditions that have characterized the latter half of the decade. The 5-year period from 2019 to 2024 includes the COVID-19 pandemic impact, subsequent policy responses, and the recent interest rate rising cycle that has cooled property demand.
The period began with relatively stable market conditions in 2019, followed by the dramatic COVID-driven boom in 2020-2021, and then the market correction that began in late 2022 and continued through 2024. This volatility resulted in an overall modest average growth rate despite the significant gains experienced during the pandemic boom.
The 1.8% annual growth rate is below the long-term inflation rate, meaning real property returns have been negative during this period. This reflects the challenging economic environment, including rising interest rates, cost of living pressures, and reduced investor activity in the Melbourne residential property market.
What was the growth rate just in the last 12 months?
Melbourne's property growth rate in the last 12 months was approximately 0.5%.
This modest growth rate reflects the ongoing market correction that began in late 2022 and has continued through 2024. The 0.5% annual growth is significantly below the long-term average and barely keeps pace with inflation, indicating a challenging period for Melbourne property owners and investors.
The slow growth in the most recent 12-month period is attributed to several factors including elevated interest rates, reduced buyer demand, increased market supply, and general economic uncertainty. Many areas of Melbourne experienced flat or even declining property values during this period.
This recent performance represents a stark contrast to the boom conditions experienced just a few years ago during 2020-2021. The current growth rate suggests the market is in a consolidation phase, with prices stabilizing after the previous period of rapid appreciation and subsequent correction.
What is the median property price in Melbourne today compared to five years ago?
As of September 2024, Melbourne's median property price stands at $791,303, with the median house price specifically at $952,339.
Five years ago in 2019, the estimated median property price in Melbourne was approximately $780,000 to $800,000. This means the current median price represents only modest growth over the five-year period, with total appreciation of roughly 1-2% across the entire timeframe.
When considering houses specifically, the current median of $952,339 represents a more substantial increase from 2019 levels, though still modest when spread across five years. The difference between overall property median and house median reflects the inclusion of apartments and other property types in the broader calculation.
This comparison highlights the challenging market conditions Melbourne has experienced, with property values essentially flat over a five-year period despite periods of significant growth during 2020-2021. The modest overall growth demonstrates how the pandemic boom gains were largely eroded by subsequent market corrections.
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What was the highest annual growth rate recorded in Melbourne in the past decade?
The highest annual property growth rate recorded in Melbourne in the past decade was 17% in 2021.
This exceptional growth occurred during the COVID-19 pandemic boom period when multiple factors aligned to create unprecedented demand for residential property. The surge was driven by record-low interest rates, government stimulus measures, changed lifestyle preferences favoring larger homes, and reduced spending in other sectors redirected toward property investment.
The 2021 boom affected all property types across Melbourne, with some inner-city areas and family-friendly suburbs experiencing even higher growth rates than the city-wide average. This period saw intense competition among buyers, with properties often selling above asking prices and within days of listing.
The 17% growth rate represents an anomaly rather than a sustainable trend, as it was driven by temporary economic conditions and policy responses. This exceptional year significantly contributed to Melbourne's 10-year average growth rate, though it was followed by market corrections that partially reversed these gains.
What was the lowest or even negative annual growth rate recorded in the past decade?
The lowest annual growth rate recorded in Melbourne in the past decade was -3.0% in 2024.
This negative growth represents a market correction following the pandemic boom period, with property values declining as economic conditions normalized and interest rates rose. The -3.0% decline reflects the cumulative impact of reduced buyer demand, increased borrowing costs, and market oversupply in certain segments.
The 2024 decline was not uniform across all areas of Melbourne, with some suburbs experiencing steeper falls while others remained relatively stable. Inner-city apartments were particularly affected, while established family homes in sought-after suburbs showed more resilience during the correction period.
This negative growth period highlights the cyclical nature of property markets and demonstrates how external economic factors can significantly impact property values. The decline came after several years of strong growth, representing a market rebalancing rather than a fundamental collapse in Melbourne's property fundamentals.
How does Melbourne's growth rate compare to Sydney's average growth rate over the same period?
Melbourne's 10-year average growth rate of 3.4% per annum compares unfavorably to Sydney's 5.9% per annum over the same period.
This significant difference of 2.5 percentage points annually means Sydney properties have substantially outperformed Melbourne properties over the decade. The performance gap reflects Sydney's position as Australia's primary financial center, stronger job growth, higher population growth, and more constrained land supply for development.
Sydney's superior performance has been consistent across most years of the decade, with Sydney experiencing higher peaks during boom periods and showing more resilience during market corrections. The gap has been particularly pronounced in the premium property segment, where Sydney's luxury market has shown stronger demand from both domestic and international buyers.
For investors comparing the two markets, Sydney's higher growth rate has come with higher entry prices and potentially higher rental yields in some segments. However, Melbourne's more moderate growth has made property ownership more accessible for first-time buyers and provided opportunities for capital appreciation in select suburbs and property types.
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How does it compare to the national Australian average growth rate?
Melbourne's 10-year average growth rate of 3.4% per annum falls below the national Australian average of approximately 5.3% per annum for the top five capital cities.
This underperformance of nearly 2 percentage points annually demonstrates that Melbourne has lagged behind the broader Australian property market trends. The national average is heavily influenced by the strong performance of Sydney, Brisbane, and Perth during certain periods, which have offset Melbourne's more moderate growth trajectory.
Melbourne's below-average performance reflects several factors including more volatile economic conditions in Victoria, higher property supply levels, and different demographic trends compared to faster-growing cities like Brisbane and Adelaide. The city's mature property market also tends to experience less dramatic price swings than emerging markets.
Despite underperforming the national average, Melbourne remains Australia's second-largest property market and continues to attract significant domestic and international investment. The lower growth rate compared to the national average may actually indicate better long-term stability and affordability compared to markets that have experienced more dramatic price appreciation.
What percentage of properties in Melbourne doubled in value within the last 10 years?
Approximately 45 Melbourne areas saw properties double in value over the past decade, but the majority of Melbourne properties did not double in value within 10 years.
Most Melbourne properties required closer to 12 years to double in value, indicating that the 10-year period was insufficient for widespread property value doubling despite periods of strong growth. The areas that did achieve doubling were typically either emerging suburbs that experienced gentrification or established areas that benefited from infrastructure improvements.
The 45 areas that achieved doubling represent a minority of Melbourne's total suburb count, with most located in growth corridors, areas undergoing urban renewal, or suburbs that were previously undervalued relative to their location and amenities. Inner-city areas and established premium suburbs were less likely to double due to their already elevated starting prices.
This data suggests that while Melbourne property investment can deliver strong returns, expectations of rapid capital appreciation should be tempered. The majority of properties delivered steady but moderate growth rather than the exponential gains that characterize truly exceptional markets or time periods.
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What is the projected average annual growth rate for Melbourne over the next 5 years?
The projected average annual growth rate for Melbourne property over the next 5 years is expected to be between 3-4% per annum.
This projection reflects a return to more normalized market conditions following the recent correction period. The forecast is based on expectations of moderate interest rate environments, steady population growth, and continued economic development in Melbourne. However, these projections assume no major economic disruptions or policy changes that could significantly impact property markets.
The 3-4% annual growth projection is considered sustainable and aligns with long-term historical averages for mature property markets. This growth rate would be sufficient to maintain property values ahead of inflation while providing moderate capital appreciation for property owners and investors.
Factors supporting this growth projection include Melbourne's continued population growth, ongoing infrastructure development, and the city's strong economic fundamentals. However, potential headwinds include affordability constraints, potential interest rate volatility, and increased property supply in certain segments that could moderate growth expectations.
What is the expected median house price in Melbourne in 2030 if the same growth continues?
If Melbourne continues with a 3.4% annual growth rate, the median property price could reach approximately $940,000 to $980,000 by 2030.
This projection is based on the current median property price of $791,303 and assumes consistent annual growth of 3-4% over the six-year period to 2030. For houses specifically, with the current median of $952,339, the projected median house price would reach approximately $1.15 to $1.20 million by 2030.
These projections should be considered indicative rather than definitive, as property markets are influenced by numerous variables including economic conditions, population growth, interest rates, and government policies. The projections assume relatively stable market conditions without major economic disruptions or policy changes.
The projected price levels would represent significant affordability challenges for first-time buyers and may influence government policy responses regarding housing supply and affordability measures. These price levels also assume continued demand growth that matches or exceeds supply increases in the Melbourne property market.
How much would a property bought for $700,000 five years ago be worth today on average?
A property bought for $700,000 five years ago would be worth approximately $770,000 to $780,000 today based on Melbourne's average growth rate.
This valuation is based on the 1.8% average annual growth rate over the last five years, which would result in total appreciation of roughly 9-11% over the five-year period. The modest increase reflects the challenging market conditions that have characterized recent years, including the COVID boom followed by market corrections.
The actual value would depend heavily on the specific location, property type, and individual property characteristics. Properties in high-demand suburbs or those that benefited from local infrastructure improvements may have performed better than the average, while properties in oversupplied areas may have experienced slower growth or even declines.
This example illustrates the importance of long-term investment horizons in property investment and the impact that market timing can have on investment returns. Properties purchased just before or during the COVID boom period may have experienced different growth trajectories than those purchased in 2019.
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 has delivered moderate but steady growth over the past decade, though performance has been below national averages and Sydney's strong results.
While the recent period has been challenging with minimal growth, projections suggest a return to more normalized 3-4% annual growth rates that would support steady capital appreciation for property investors and owners.
Sources
- Property Update - House Prices in Australia Over the Last 10 Years
- Metropole - Melbourne Housing Market Update
- Property Update - Australian Property Market
- OpenAgent - Melbourne Property Market
- Pro Solution - Property Growth Outlook
- RealEstate.com.au - Melbourne Property Market Performance
- DPN - House Price Growth Australia Over 30 Years
- Aussie - 25 Years Report