Are you aware that Melbourne’s house prices are currently 41% cheaper than Sydney’s, offering a $600,000 savings on median homes?
This denotes the largest gap in over two decades.
While other Australian capitals experienced double-digit growth, Melbourne remained stagnant.
This makes Melbourne one of the few major cities where values remain below previous highs, giving buyers an entry point that’s still relatively affordable.
Nevertheless, this clear weakness might actually present the biggest opportunity for strategic property investors in 2025.
Melbourne’s Property Market Turnaround
Melbourne has posted four consecutive months of price growth in 2025. This marks a notable shift from 2024 when prices fell in most months. Current data shows dwelling values remain 4.5% below their March 2022 peak, creating what many experts consider a countercyclical investment opportunity.
The numbers tell a compelling story. Finance brokers in Melbourne report increased client interest as market confidence returns. Brisbane leads national growth with a 7.8% annual increase, while Melbourne’s slower recovery suggests untapped potential for savvy investors.
According to CoreLogic data, national home values have increased for three consecutive months, with Melbourne joining in the trend. This upward momentum, while not aggressive, suggests a shift in sentiment.
Capital inflows, population growth, and steady demand have started lifting prices again.
Several important figures support this trend:
| Metric | Value (June 2025) | Trend |
|---|---|---|
| Melbourne Median House Price | $939,965 | +0.5% MoM |
| Melbourne Unit Price | $614,689 | +0.4% MoM |
| Annual Price Movement | -1.2% | Recovering |
| Vacancy Rate Under | 1% | Historically Low |
Investors who are focused on long-term growth are watching these signs closely.
Why Are Prices Still Below Their Peak?
Melbourne’s property market was hit hard in 2024, mainly due to poor consumer confidence and weak state-level economic performance. Factors like business exits, higher property taxes, and additional levies created a drag on both investment and buyer demand.
Still, Melbourne remains a top-tier city for long-term property gains, thanks to its diverse economy, strong infrastructure pipeline, and population growth. These long-term drivers are now beginning to outweigh the temporary challenges.
Price Forecasts and Market Predictions
Domain’s latest forecast reveals Melbourne will lead capital city growth in the coming year. The predictions show promising returns for those entering the market now.
| Property Type | FY25 Growth | FY26 Growth | Current Median | Projected FY26 |
|---|---|---|---|---|
| Melbourne Houses | 0% | 6% | $1,046,246 | $1,112,623 |
| Melbourne Units | -3% | 5% | $555,522 | $584,400 |
These forecasts indicate Melbourne will outperform as the market typically responds quickly to interest rate changes.
Mortgage brokers in Melbourne emphasize that waiting for further rate cuts could cost investors significant growth opportunities.
Historical data supports this optimism. Bank of Queensland’s analysis of four decades shows that once rates start falling, property prices don’t wait around. A 10-15% price rise over the next two years appears realistic, especially with unemployment near 50-year lows.
Current Market Conditions
Melbourne’s property values show clear signs of recovery momentum:
Latest Cotality Data (June 2025):
- All dwellings: $791,303 (0.4% monthly growth)
- Capital city houses: $939,965 (0.5% monthly growth)
- Capital city units: $614,689 (0.4% monthly growth)
- Regional dwellings: $581,981 (0.6% monthly growth)
The data reveals that local mortgage brokers notice increased activity across all property segments. Monthly growth rates indicate sustained upward pressure on values.
Market dynamics have shifted dramatically. Melbourne now offers the lowest house prices against Sydney equivalents in twenty years. This $600,000 median price difference represents significant inbuilt equity for strategic investors.
How Smart Investors Are Approaching 2025?
Those working with a finance broker in Melbourne are no longer sitting on the sidelines. Instead, they are using market conditions to their advantage, leveraging lower prices and increased rental yields. Many buyers are:
- Seeking properties below replacement cost
- Avoiding off-the-plan and high-rise units
- Focusing on family-friendly homes in low-supply areas
- Using structures like SMSFs and trusts for tax-effective purchases
The smart money is going into suburbs that offer owner-occupier appeal, proximity to transport, and limited development pipeline.
Is Melbourne A Good Investment In 2025?
What should you consider Melbourne? For the simple fact of its varied economy, and large-scale development, and population growth, it is a city for long-term investment.
Using current information and market trends, there is an opportunity for the underperformance of Melbourne. There are always risks, but there is a lot of it already expected.
Smart buyers already know they are not looking to take rapid short-term gains. They are choosing quality properties with long-term potential and enabling them with the proper financial instruments and mindset to manage risks and drive returns.
When prices are below replacement costs, they provide buyers with “better-than-positive” “built-in” equity. Inner-city suburbs and middle-ring suburbs with limited supply will yield high capital growth, but not all properties will perform the same. Avoid high-rise apartments as they come with the risk of oversupply.
Family-oriented houses or townhouses with access to good transport links and services in gentrifying areas will offer the right balance of capital growth and rental income.
Ready To Make Your Move In Melbourne’s 2025 Property Market?
The correct property decision starts with the right support. At Credit Hub, our committed personal finance brokers can deliver honest clear advice, live rates, and a simple loan through our new technology.
Whether you’re a first home owner, refinancing, or looking to build an investment portfolio, you can feel confident in taking action with our local mortgage brokers.
You will also receive support with reliable conveyancing and property services, all in one convenient location, and give you clarity to move forward.
Call us and get some clarity for your 2025 property plans.
Disclaimer:
The information presented by staff or employees of Credit Hub and its associated companies is provided for general informational purposes only. We do not guarantee the accuracy, completeness, or timeliness of the data or views presented. Audience members should conduct their own research and verify any information before relying on it. Credit Hub and its associated companies are not liable for any errors or omissions, or for any actions taken based on the information presented.