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Explore the Melbourne property market outlook in 2025. From price forecasts and suburb trends to infrastructure impacts and investment strategies, find everything you need to make informed decisions.

Market Overview & Price Forecasts

After a modest correction in 2022–23, Melbourne’s housing market is on the path to recovery. CoreLogic reports the city’s median house price around A$772,000, slightly below its peak, with unit prices tracking under A$600,000

KPMG forecasts 3.5% growth in house prices in 2025 and 6% in 2026, while unit prices may rise 4.7% in 2025 and 7.1% in 2026 . Reuters analysts expect steady national growth of 4–5% annually, with Melbourne prices rising around 3.5%.

Key Growth Drivers

• 1) Population Surge & Migration: 183,000+ new residents in 2024—with strong net overseas and

       interstate migration concentrated in growth corridors like Wyndham, Melton, Hume, and Whittlesea

  2) Housing Shortages: Dwelling approvals and completions at decade lows—driving prices and rents higher.

  3) Rental Market Tightness: Vacancy rates around 1.5% push yields up and rents rising double digits annually.

  
  

  Infrastructure & Urban Renewal

  
  

  Major transport upgrades—including the Metro Tunnel and Suburban Rail Loop—are improving accessibility and lifting demand in middle and outer suburbs like Wyndham and Melton. Urban renewal in Fishermans Bend and development projects in Carlton reflect renewed investor interest, such as SP Setia’s $114M land purchase.

  
  

  Suburbs to Watch : 

  
  

  1) Wyndham / Melton – Favoured for transport access and affordability with strong demand for new housing.

  2) Whittlesea (Epping, Mernda) – Family‑friendly, affordable suburbs gaining momentum.

  3) Monash Region (Clayton, Glen Waverley) – Driven by education and medical precincts, packed with rental

      demand.

  4) Frankston & Coastal Markets – Lifestyle appeal alongside rejuvenation projects and lower price points.

  5) Blue‑chip suburbs (Toorak, East Melbourne) – High‑end market softening but still market‑valued prestige

      zones.

  
  

   Risks & Challenges

  
  

  • 1) Luxury market weakness: With higher borrowing costs, the top end has cooled; price sensitivity is rising

        among premium buyers.

    
    

    2) Policy headwinds: Land tax hikes and removal of stamp duty concessions for off‑the‑plan units have

        affected investor sentiment.

    
    

    3) Rate uncertainty: If interest rates remain elevated, demand may stall, though anticipated easing could

         catalyse recovery .

    
    

    
    What Smart Investors & Buyers Should Know

    
    

    1) Expect buyer’s market conditions early in 2025—more listings and negotiation space.

    
    

    2) Outer and middle-ring suburbs may outperform as affordability and infrastructure align.

    
    

    3) Sustainability and smart-home features are increasingly valued by buyers seeking energy-efficient

         lifestyle.

    
    

    4) Long-term outlook favors 21–21% growth in houses and units to 2027 across Melbourne, aligned with

         population and infrastructure trends.

    
    

    
    

    
    

  ✅ Final Take

  
  

  • Melbourne in 2025 stands at a critical juncture—transitioning from consolidation into growth, anchored by affordability, migration trends, and infrastructure investment. While affordability pressures remain, thoughtful investors and home buyers positioned in rising suburbs stand to benefit as recovery accelerates.