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The winds of change are upon Melbourne’s property market, which has been going through somewhat of a rough downturn ever since hitting all-time peak median prices in the early parts of 2022. The 13 rate hikes by the RBA didn’t help things much, with subsequent median property prices dropping and general buyer and seller sentiment not particularly buoyant.
But with the RBA cutting rates for the first time in almost 3 years, coupled with an optimistic outlook and numbers trending in a positive direction, it appears as though there is light at the end of the tunnel for real estate in Melbourne.
A rates cut the entire country has been waiting for
At the first meeting of the year back in February, The Reserve Bank of Australia (RBA), on the back of months of steadily declining inflation numbers along with a number of other factors, made the decision to cut the cash rate by 25 points from 4.35% to 4.1%. This is the first time the RBA has cut the cash rate in 4 years.
“This is the rate relief Australians need and deserve,’ said Treasurer Jim Chalmers. So what does this mean for mortgage owners? If you have a current home loan of $500,000, you will save around $960 a year ($80 a month), while those with a $1,000,000 loan will save $1848 a year ($154 a month). All the big 4 banks – Westpac, CBA, ANZ, and NAB – quickly announced they will be passing on the rates cuts to customers.
Onward and upward for the Melbourne property market
While we are less than two months separated from the RBA’s first rates cut in 4 years Melbourne’s property market is already showing signs of resurrection and getting back to its glory days.
According to one of the country’s leading real estate data experts PropTrack, Melbourne has gained the most steam of any capital city in Australia in the early stages of 2025, with home values rising 0.7% in the first quarter of the year. This is compared to a 1.3% dip in property prices in the December quarter to end 2024. The rise from the last quarter of 2024 to the first quarter of 2025 is the largest of any capital city in the country.
“Melbourne is primed for a very significant turnaround in 2025,” said Jacob Caine, President of the Real Estate Institute of Victoria (REIV) to the Herald Sun. “Inquiry levels, bidder numbers, offer levels have all seen a dramatic increase, particularly since the Reserve Bank reduced the interest rates.”
Melbourne might not be so affordable for very long
For years it was Melbourne and Sydney duking it out for the top prize when it came to median property pricing. But as of the start of 2025, Melbourne is currently sitting in 56h place amongst major capital cities behind Sydney, Brisbane, Adelaide, Perth, and Canberra. Darwin and Hobart are the only 2 Australian cities that are cheaper to buy a property than Melbourne.
What does this mean for Melbourne? Comparative to the other major Australian cities, Melbourne has now become an affordable option. In an article in the Australian Financial Review, Arjun Paliwal, head of research at buyers’ agency InvestorKit, noted that a resurgence is already happening in the lower segment of Melbourne’s market.
“We’re trying to target $750,000 to $950,000 price points in Melbourne because houses priced under $700,000 are now attracting between 30 and 50 groups at open homes, and we’re starting to miss out on a lot of those properties due to high demand,” Mr Arjun told the AFR. “So I would say Melbourne’s turnaround is already occurring in the lower quartile of the market. If you’re looking to buy a house under $800,000, that window is closing fast, but if you have a larger budget, then you can take your time a little bit.”
Why not look to make a home in one of Melbourne’s most liveable suburbs
Melbourne has always had a reputation as being one of the world’s most liveable cities, but PwC’s CityPulse 2025 report has taken it one step further.
Released in March, the report delves into Melbourne’s most liveable suburbs, assessing services, schools, community, healthcare, and other key indicators. Coming out on top with a liveability rating of 10.0 was Fitzroy North, which currently has a median house price of $1,400,000 and median unit price of $565,000.
Not far from Fitzroy North but also achieving a spot high on the list is Flemington, which has a rating of 9.8 but offers a more affordable entry with a median house price of $1,060,000 and a unit price of $401,500. Other suburbs that cracked the CityPulse list include Surrey Hills, Hawthorn East, West Melbourne, Hughesdale, and Camberwell.
There has been a significant shift though in sentiment in the investing market in Melbourne to begin 2025, with an RBA rates cut the beginning of what will likely be a return for investors to the city and suburbs.
Stephanie and Anthony’s decision to join Woodards Inner North was driven by a shared vision for exceptional real estate service and a commitment to client-focused results.
After a soft 2024, Melbourne’s property market is showing clear signs it has turned a corner.
Craving the beachside lifestyle? No one knows it like Darren Sandler, a Director at Woodards Mornington Peninsula.
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