Melbourne’s Property Market – Spring 2025

Melbourne’s housing market had its single highest monthly increase in the last 12 months during October, with values up 0.9% month‑on‑month basis and up 1.6% higher over the quarter (6.4% annualised). Whilst momentum is positive, it’s worth noting that this level of growth is on track with long-term growth trends. Since the first interest rate cut in February, Melbourne property prices are up 4.2% but are still 1.4% below their March 2022 peak. Regardless, the market has momentum, with clearance rates and auction competition still strong.   

Rents & vacancy: what’s happening now (Melbourne) 

• Rents have re‑accelerated modestly in 2025. On a 12‑month basis to October, house rents are up ~1.6% and unit rents ~2.2% in Melbourne (Cotality’s rental index), but the pace of growth is re-accelerating.  

• Vacancy is tight, but not as tight as it was two years ago. SQM’s city series puts Melbourne at ~1.8% in September 2025 (9,407 vacancies) well below pandemic peaks and low enough to support ongoing rental growth, though not as low as other capital cities which also explains why Melbourne’s rental growth is lagging. 

Source: SQM Research 

Suburb‑level heat map: the leaders of 2025 so far 

Cotality’s SA3 leaderboard highlights Melbourne’s outer and mid‑ring affordability corridors as this year’s standouts. Top growth areas over the past 12 months include: 

The solid gains in more affordable pockets and steady outcomes in inner‑middle rings mirrors the national trend where lower and middle price tiers are leading the upturn. 

What’s driving conditions (and what could change) 

Supply on the market has risen more in Melbourne - Spring brought a 15.4% increase in total listings to 44,00 and listings are now modestly above last year’s level. Melbourne has had a sharper lift in the number of properties listed for sale compared with the other capitals, which is likely one reason Melbourne’s price growth has been more modest.  

Policy impulse at entry price points. The expanded 5% deposit scheme (Home Guarantee Scheme) kicked in on 1 Oct 2025, supporting lower‑to‑middle price tiers where Melbourne has depth.  

Macro watch: investor credit - Regulators remain alert as investor housing credit growth has accelerated (fastest since 2015 per RBA aggregates), raising the odds of prudential tightening if momentum persists. Per the table below, investor credit growth has increased by 50% in the last two years. 

New Residential Loan Commitments (National) 

Sources: AU-HVI-Nov-2025 and Reserve Bank of Australia 

The road ahead 

As we head into the end of the year, both the Sales and Rental markets in Melbourne appear to have momentum. As is always the case, the divergence in results by sub-markets and property types is significant. Over a five-year period, Melbourne is significantly lagging other capital markets and despite the positive change in momentum, in 2025 this gap has further widened. Regardless, there’s no doubt that investors have taken a view that Melbourne’s time to shine is coming with a notable increase in Investor activity during the year. If you are thinking about expanding your own portfolio, we’d love the opportunity to speak with you.