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Melbourne's property market has delivered an average annual growth rate of 6.9% over the past decade, though recent interest rate increases have temporarily slowed momentum.
As of mid-2025, Melbourne's median house price sits at approximately $1,024,000, representing a 1.5% decline over the past 12 months due to elevated interest rates. However, the February 2025 rate cut has already sparked a recovery, with inner Melbourne house prices rising 3.6% in just three months. The market shows clear geographic variations, with outer suburbs consistently outperforming inner-city areas in recent years.
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 property prices have grown 6.9% annually over 10 years, though the market experienced a 1.5% decline in 2024 due to high interest rates.
The February 2025 rate cut has already triggered a recovery, with prices rising 3.6% in three months across inner Melbourne suburbs.
| Metric | Current Status | Historical Performance |
|---|---|---|
| 10-Year Annual Growth Rate | 6.9% | Total 96% increase over decade |
| Current Median House Price | $1,024,000 | Down 1.5% from previous year |
| Total Annual Return (Houses) | 9.8% | 6.9% capital growth + 2.95% rental yield |
| Total Annual Return (Units) | 11.3% | 6.9% capital growth + 4.38% rental yield |
| Average Days on Market | 51 days | 42 days three years ago |
| Best Performing Suburb (2024) | Keilor (+20%) | Median price: $1.2 million |
| Rate Cut Impact (Feb 2025) | +3.6% in 3 months | Inner Melbourne houses |
What was the average annual property price increase in Melbourne over the past 10 years?
Melbourne's residential property market has delivered an average annual growth rate of 6.9% over the past decade.
This consistent performance has resulted in a total price increase of approximately 96% over the 10-year period. The growth has been relatively steady compared to other Australian capital cities, though it has experienced some volatility during periods of economic uncertainty.
The 6.9% annual growth rate includes both boom and bust periods, such as the COVID-19 pandemic surge in 2020-2021 and the recent interest rate-induced slowdown in 2023-2024. During peak periods, Melbourne property prices grew by more than 15% annually, while challenging years saw declines of 2-3%.
This growth rate positions Melbourne as a solid performer among Australian capital cities, though it has been outpaced by Brisbane in recent years. The sustained growth over a decade demonstrates the resilience of Melbourne's property market despite economic cycles.
It's something we develop in our Australia property pack.
How much did the median house price in Melbourne change last year, in percentage terms?
Melbourne's median house price declined by 1.5% over the most recent 12-month period ending in early 2025.
This decline reflects the impact of aggressive interest rate rises implemented by the Reserve Bank of Australia throughout 2023 and early 2024. The 1.5% decrease represents approximately a $15,000-$20,000 reduction from peak prices reached in late 2022.
The decline was not uniform across all Melbourne suburbs, with inner-city and premium areas experiencing larger falls while outer suburban markets showed more resilience. Some affluent inner suburbs saw declines of 3-5%, while middle and outer ring suburbs recorded modest growth or smaller declines.
However, the market began recovering in February 2025 following the first interest rate cut, suggesting the 1.5% annual decline may represent the bottom of the current cycle rather than an ongoing trend.
What is the current median house price in Melbourne?
As of June 2025, the current median house price in Melbourne is approximately $1,024,000.
For all dwelling types including apartments and units, the median sits lower at around $772,561. The house-only median of $1,024,000 represents the middle point of all house sales across greater Melbourne, from inner-city terraces to outer suburban family homes.
This current price level is approximately $70,000 below the peak reached in late 2022, when Melbourne's median house price briefly touched $1,094,000. The recent interest rate cut in February 2025 has already begun pushing prices higher, with some inner suburbs recovering 3-4% in just three months.
Regional variations are significant, with inner Melbourne house medians exceeding $1.5 million while outer suburban areas remain closer to $900,000-$950,000. The $1,024,000 figure represents a metropolitan-wide average that includes all areas and property types within greater Melbourne.
What was the median house price in Melbourne five years ago?
Five years ago in 2019-2020, Melbourne's median house price was approximately $815,000 to $850,000.
This price level represents a significant baseline before the dramatic market movements of the early 2020s. The COVID-19 pandemic and subsequent monetary policy responses drove substantial price growth from this 2019-2020 baseline.
The increase from $815,000-$850,000 to today's $1,024,000 represents growth of approximately 20-25% over five years, or roughly 4-5% annually. This five-year growth rate is actually below the longer-term 10-year average due to the recent price decline in 2024.
The 2019-2020 period was characterized by relatively stable market conditions before the extraordinary stimulus measures and low interest rates that drove the 2020-2022 property boom. Understanding this baseline helps contextualize current price levels and future growth potential.
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What's the average annual return for Melbourne residential property including capital growth and rental yield?
Melbourne residential properties deliver an average total annual return of 9.8% for houses and 11.3% for apartments when combining capital growth and rental yields.
| Property Type | Capital Growth (Annual) | Rental Yield (Gross) | Total Annual Return |
|---|---|---|---|
| Houses | 6.9% | 2.95% | 9.85% |
| Apartments/Units | 6.9% | 4.38% | 11.28% |
| Inner Melbourne Houses | 6.9% | 2.5% | 9.4% |
| Outer Melbourne Houses | 7.2% | 3.2% | 10.4% |
| Premium Apartments | 6.5% | 3.8% | 10.3% |
| Affordable Units | 7.1% | 5.2% | 12.3% |
| Metro Average | 6.9% | 3.4% | 10.3% |
How does Melbourne's property growth rate compare to Sydney and Brisbane over the past 10 years?
Melbourne has outperformed Sydney but underperformed Brisbane in terms of 10-year property growth rates.
Melbourne's 6.9% annual growth rate sits between Sydney's 6.6% and Brisbane's superior 8.4% over the decade. However, recent performance tells a different story, with Brisbane recording 12.5% growth in the past year compared to Melbourne's 1.8% decline and Sydney's modest gains.
Sydney's median house price currently sits at $2,038,727, significantly higher than Melbourne's $1,278,290, while Brisbane has reached $1,232,304. The price gap between Sydney and Melbourne has widened over the decade, with Sydney properties now costing nearly double Melbourne's median.
Brisbane's recent outperformance reflects interstate migration patterns, relative affordability, and infrastructure investment. Melbourne's traditionally strong performance has been hampered by extended lockdowns, high interest rate sensitivity, and oversupply in some apartment markets.
It's something we develop in our Australia property pack.
Which suburbs in Melbourne have seen the highest annual price growth in the past 5 years?
The highest-performing Melbourne suburbs over recent years are primarily located in the outer ring, with Keilor leading at 20% growth in the past year alone.
1. **Keilor** - 20% annual growth to $1.2 million median2. **Wantirna South** - 14.8% growth to $1,281,000 median 3. **Oakleigh South** - 13.7% growth to $1.16 million median4. **Outer Eastern suburbs** - Average 8-12% growth5. **Northern growth corridors** - Average 7-10% growth6. **Western suburbs** - Average 6-9% growth7. **South-Eastern pockets** - Average 5-8% growthThese outer suburban areas have benefited from relative affordability, family-friendly environments, infrastructure development, and strong population growth. The trend reflects buyers seeking value further from the CBD while maintaining reasonable commute access.
Inner-city suburbs have generally underperformed, with many premium areas experiencing price declines or minimal growth due to high starting prices, reduced international student and worker populations, and changing lifestyle preferences post-COVID.
What is the average property price difference between inner, middle, and outer Melbourne suburbs?
Melbourne's property prices show dramatic variation based on distance from the CBD, with inner suburbs commanding significant premiums over outer areas.
| Location | Median House Price | Median Unit Price | Premium vs Outer |
|---|---|---|---|
| Inner Melbourne (0-10km) | $1,560,000 | $585,000 | +$640,000 |
| Middle Melbourne (10-25km) | $1,350,000 | $660,000 | +$430,000 |
| Outer Melbourne (25km+) | $920,000 | $520,000 | Base level |
| Premium Inner Suburbs | $2,200,000+ | $750,000+ | +$1,280,000 |
| Growth Corridors | $750,000 | $450,000 | -$170,000 |
| Fringe Areas | $650,000 | $400,000 | -$270,000 |
| Metropolitan Average | $1,024,000 | $572,000 | Reference point |
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What has been the impact of interest rate changes on Melbourne property prices in recent years?
Interest rate changes have had a profound and immediate impact on Melbourne property prices, with the market showing high sensitivity to monetary policy adjustments.
The aggressive rate hiking cycle from May 2022 to November 2023, which saw rates rise from 0.1% to 4.35%, directly caused Melbourne's median house price to decline by 1.5% over 12 months. This represents approximately a $15,000-$20,000 reduction from peak prices.
The February 2025 interest rate cut of 0.25% immediately sparked a market recovery, with inner Melbourne house prices rising 3.6% in just three months and unit prices jumping 5.9% in the same period. This demonstrates the market's sensitivity to even modest rate changes.
During the low-rate environment of 2020-2021, Melbourne properties surged by 15-20% annually, driven by borrowing capacity increases and investor activity. The recent rate cycle has essentially reversed two years of gains, bringing prices back to 2022 levels.
It's something we develop in our Australia property pack.
What percentage of Melbourne suburbs have had negative growth over the past year?
A significant portion of Melbourne suburbs, particularly in affluent inner-city areas, experienced negative growth over the past year, though exact percentages vary by data source.
Inner Melbourne and premium suburbs were disproportionately affected, with many recording declines of 2-5% over the 12-month period. These areas include established suburbs like Toorak, South Yarra, Brighton, and Hawthorn, where high price points made them particularly sensitive to interest rate increases.
Middle-ring suburbs showed mixed results, with approximately 40-50% recording negative growth while others maintained modest positive growth. Outer suburban areas generally outperformed, with the majority recording positive growth despite the challenging market conditions.
The geographic pattern reflects buyer behavior during high interest rate periods, where affordability constraints push demand toward lower-priced outer areas while premium markets experience reduced activity and price pressure.
How many properties in Melbourne were sold above asking price in the past 12 months and what was the average premium?
The percentage of Melbourne properties selling above asking price dropped significantly during 2024 compared to the boom years of 2021-2022.
During the market peak in 2021-2022, approximately 60-70% of Melbourne properties sold above asking price with average premiums of 5-15%. However, the challenging conditions of 2024 saw this figure fall to an estimated 25-35% of properties selling above asking price.
Average premiums above asking price moderated to 2-5% during 2024, reflecting the more balanced market conditions. Premium suburbs often saw properties sell at or below asking price, while well-located middle and outer suburban properties continued to attract modest premiums.
The February 2025 interest rate cut has begun shifting these dynamics, with early reports suggesting more properties are again selling above asking price as buyer confidence returns and competition increases.
What's the average time on market for residential properties in Melbourne right now compared to 3 years ago?
Melbourne residential properties currently take an average of 51 days to sell, compared to 42 days three years ago in February 2022.
This nine-day increase represents a 21% longer selling period, reflecting the shift from a hot seller's market to more balanced conditions. The extended timeframe gives buyers more choice and negotiating power compared to the frenzied conditions of 2021-2022.
Premium properties in inner Melbourne often take 60-80 days to sell, while well-priced outer suburban properties may still sell within 30-40 days. The variation depends heavily on price point, location, and property condition.
Three years ago, many Melbourne properties were selling within days of listing, often with multiple offers and auction premiums. The current 51-day average represents a return to more normalized market conditions where buyers have time to inspect and consider purchases carefully.
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 demonstrates resilience despite recent challenges, with the 6.9% annual growth rate over 10 years providing solid long-term returns for investors.
The February 2025 interest rate cut signals a potential market recovery, though buyers should carefully consider location, property type, and their individual financial circumstances before making investment decisions.
Sources
- Property Update - House Prices in Australia Over the Last 10 Years
- Domain - Melbourne's Median House Price Falls Below Peak
- OpenAgent - Melbourne Property Market Profile
- Victorian Government - Median House Prices by Type and Sale Year
- OpenAgent - Suburbs with Highest Rental Yield Australia
- Prophero - What is a Good Rental Yield for Property Investors
- House Finder - Market Trends Brisbane Sydney Property Markets
- Domain - Melbourne Suburbs Where House Prices Rose Most
- Compare the Market - Inner City or Outer Suburbs Affordability
- RealEstate.com.au - Property Prices Surge Since Rate Cut