Melbourne property market data, trends, forecasts

Melbourne property market news

After a historic boom in 2021 which saw median Melbourne property prices surge by more than +17 per cent, 2022 ended up being a turbulent year for the Melbourne property market. Home values fell -9.6 per cent from the February 2022 peak according to CoreLogic data, but momentum shifted significantly in 2023. Leading into 2024, however, things took another turn and Melbourne property prices have declined slightly in the current year.

Melbourne property prices - September 2024

The 2023 turnaround was driven by a prolonged shortage of listings which has finally started to increase. Sellers displayed hesitancy in the rising interest rate environment, and that shortage helped to stimulate price growth once again. A combination of rising listings and high interest rates have put the brakes on growth, though. 

Looking at 2024, new listings in September were down -3.3 per cent on the same month in 2023, although total listings are up +7.9 per cent, suggesting there's still some strong seller activity in the market. Melbourne's median days on market (DOM) was 31 in September 2024, a leap up from 27 days recorded the previous year. Sales volumes are up +13.8 per cent year on year.

Melbourne house prices

The house-led boom of 2021 saw Melbourne house prices shoot up to record highs before hitting their peak in February 2022 and then falling over the following 12 months. Solid growth was returning since that point until a slowdown in the latter stages of 2023 and early into 2024.

Melbourne house prices - September 2024

Melbourne's median house price saw a slight dip in September, falling -0.2 per cent to sit at just over $925,000. Quarterly movement is also in the negative, as is annual growth which has now dropped to -1.3 per cent. We will now wait to see whether any price growth can return in the face of rising listings over the final quarter of 2024.

Top 5 Melbourne suburbs for first home buyers - houses

While Melbourne remains more affordable than Sydney, finding reasonably priced housing to suit first home buyers can be tricky. Here are a few of our top selections for Melbourne suburbs where you can still pick up a house below the city's median price. 

Top Melbourne suburbs under $950,000 house price

Melbourne unit prices

While house prices surged in 2021, Melbourne's median unit price increased at a softer rate as buyers followed a 'race for space' mentality and looked for larger homes or regional escapes. The positive is that Melbourne unit owners since experienced smaller drops in value as the downturn unfolded, and unit prices held strong throughout most of 2023. They're now slightly outperforming houses in the current market. 

Melbourne unit prices - September 2024

The median unit price in Melbourne gained a small +0.1 per cent in September to sit just over $610,000. Over the past three months, prices are down by -0.5 per cent, while annual growth sits in marginally negative territory at -1.6 per cent.

An increase in demand for units due to upcoming immigration and renewed interest from first home buyers looking for a cheaper alternative could continue to support unit prices in 2024. 

Top 5 Melbourne suburbs for first home buyers - units

Units offer better affordability for first home buyers in Melbourne, although median prices are still substantial. Here are some of our top picks for Melbourne suburbs where you can buy below the median unit price. 

Top Melbourne suburbs under $600,000 unit price

Melbourne property market forecast 2024-25

2023 was a year of two halves. Prices surged in the first six months of the year before easing off later on and drifting into 2024 with negligible growth. So what are the big banks saying about what to expect in the year ahead?

NAB's latest Melbourne house price forecast has eased further, projecting Victorian capital dwellings losing -0.7 per cent in 2024 with a further +3.7 per cent gain to come in 2025. 

Westpac's Melbourne real estate forecast sits in a similar range, with prices now expected to hold flat in 2024 and gain +3.0 per cent in 2025.

Big four banks' Melbourne home price forecasts 2024-25

Whether or not this growth can be achieved still largely depends on the supply and demand dynamic over the rest of the year. Interest rates had extensive impacts on the market and, while there is now a period of stability, the high rate environment is still causing stress for buyers and homeowners alike. 

Currently, the RBA sits at 4.35 per cent, a long way up from the emergency-level 0.1 per cent rate borrowers were enjoying until May 2022. The banks mostly expect there will be no further hikes, with rate cuts to begin in the later stages of 2024 or early in 2025.

Big four banks' cash rate forecast 2024-25

Melbourne house prices outperformed units throughout the rebound, though that dynamic has been shifting. Units and more affordable houses could now be well-placed to deliver stronger gains throughout 2024.

Units and entry-level houses are expected to appeal further to incoming investors and first home buyers as immigration has ramped up significantly, bringing additional demand to the rental market in particular.

What are industry experts saying?

Michael Yardney - Director of Metropole Property Strategists

"Why the underperformance of the Melbourne market? Partly it might reflect the greater stock of housing available for sale in the Melbourne market relative to other states.

Also, investor demand has also been lower in Melbourne due to discontent with the way the Victorian government is treating investors and favouring tenants.

Another possible reason the Melbourne market has underperformed is what has happened to the number of people per household.

While that number declined over COVID, particularly in Melbourne, the rise in rents at a time of the general high cost of living has led to a number of people either having to move into a group house or move back home. And that could be playing a role of reducing demand by more in Melbourne than in some of the other cities."

Shane Oliver - Chief Economist at AMP

"It may take several rate cuts to fire up Melbourne’s house prices, but when it occurs, it could come back with greater strength than what we’re likely to see in Brisbane and Adelaide, and quite possibly Perth, depending on what happens with commodity prices.

History tells us that as the affordability deteriorates in other capitals and improves in Melbourne’s favour, that will eventually set up a sharper recovery in the Melbourne market relative to the other cities."

Melbourne house prices graphs and charts

The latest chart pack from CoreLogic clearly demonstrates the rapid acceleration and subsequent deceleration of the Melbourne property market over the past two years. The worm turned once more in 2023 but has fallen back towards flatter levels moving into 2024.

The upturn during the 2021 boom was one of the most aggressive and significant periods of growth in Australian history. The downturn that's followed has also proved to be a historic one, though, but growth came back with strength in 2023. 

Zooming out and looking at the wider context over the past 30 years, though, prices in Melbourne have seen incredibly strong increases. The below chart shows Melbourne house prices soaring well beyond every capital city save for Sydney, particularly since around 2013.

When taken into the perspective of even the past few years, Melbourne homeowners have experienced huge gains to the value of their properties.

Selling Melbourne property

According to Domain's latest figures, auction clearance rates in Melbourne have been holding strong since the market recovery, regularly sitting at or above 65 per cent. Melbourne Days On Market (DOM) has pushed higher and is currently above the average national level.

Melbourne property investment

The Melbourne property market has been turbulent for investors throughout the pandemic, however prices have lowered, rental vacancies are still around record lows, and asking rents continue to surge with further demand expected due to increased immigration. Considering these factors, it could be a positive time for Melbourne property investors. Many are opting out of the market, though, as rising mortgage commitments create pressure.

Top 5 suburbs for Melbourne investors

The latest BuyersBuyers Investor Special Report detailed some of the top suburbs where Melbourne investors could find strong future potential. 

The report explains that "prior to the pandemic, Melbourne had become a global city, and its population growth was the strongest in Australia due to strong immigration. 

"This trend is likely to resume in 2023, and Melbourne is expected to be the largest capital city of Australia over the coming decade."

Top suburbs for investors to buy units in Melbourne

The report noted that "family-suitable apartments in small unit blocks in popular areas, where houses are out of reach, have also delivered solid capital growth and a healthy rental return," adding that "units have underperformed houses significantly in Melbourne over the past decade, and there are some opportunities for contrarian investors to pick up a bargain."

Looking to invest in Melbourne property? 

• Check out our list of best suburbs to invest in Melbourne for 2024
• Get stuck into some expert advice on where to find the top 10 suburb picks for Australian investors
• Discover the Melbourne suburbs with the highest rental yield
• On a budget? Here are the top 10 cheapest suburbs to buy in Melbourne