The Melbourne Market Has Turned A Corner

After a soft 2024, Melbourne’s property market is showing clear signs it has turned a corner. At Woodards, we’ve seen firsthand how Melbourne’s property market has shifted in recent months. February stands as a clear turning point, with prices rising at the fastest pace in three years. Not only did Melbourne outperform every other capital city, but it also edged ahead of Sydney in price growth—an encouraging shift that signals confidence is returning.

According to the latest PropTrack Home Price Index, Melbourne’s home values rose 0.67% in February the strongest monthly gain since 2022. And for the first time since 2020, Melbourne led the nation in house and unit price growth.

Interest rate cut sparks renewed confidence
One of the drivers contributing to the market shift was the Reserve Bank of Australia’s decision to cut the cash rate by 0.25%, to 4.1%, on February 18. The impact was swift - buyer sentiment lifted, confidence buoyed, and we saw auction clearance rates lift across the city.

For many sellers, 2024 felt like a waiting game. But this rate cut, along with improving economic stability, has given vendors the impetus they needed. Melbourne’s market has always been highly responsive to interest rate movements, and this time is no different.

Melbourne’s auction market revival
Supporting the light at the end of the tunnel are the latest auction results. Melbourne saw 1,467 homes go under the hammer the weekend following the rate cut, which was the highest volume since late October 2024. According to CoreLogic, the preliminary clearance rate hit 72.1%, up from 70.7% the previous week. It was the best result since July last year.

The momentum carried into March, with a preliminary clearance rate of 70.3% on the first weekend, up 5% from the same time last year despite similar auction volumes. This shift signals that the market is moving back towards balance. A 70% clearance rate typically indicates a stable market, while anything above that suggests rising competition among buyers.

Where are we seeing the strongest results?
Some of Melbourne’s key sub-regions have been leading the charge in preliminary clearance rates. The South East topped the list the first weekend in March, at 80%, followed by the West (73.7%) and Inner East (71.8%). The Inner South (70%) and Outer East (69.4%) also performed strongly, showing that demand is strengthening across a wide range of markets.

While prestige suburbs tend to react first to interest rate movements, this time the recovery is more widespread—another sign of a market on the move.

Investors are eyeing Melbourne again
It’s not just owner-occupiers driving the market - investors are making a comeback, and that’s great news for property managers. Over the past two years, many landlords exited due to changing tax policies and increased regulations, which tightened rental supply and drove rents higher.

Now, interstate investors - particularly from Sydney - are re-entering the Melbourne market, drawn by strong rental yields and more affordable entry points.

One example is the Inner North, with areas in that part of the city making Hotspotting’s list of highest-yielding suburbs for units, with yields of up to 7.4%. Looking ahead, we expect interstate investor interest to continue growing as Melbourne’s market stabilises and rental demand remains strong.

A positive outlook for 2025
It’s clear Melbourne’s real estate market is on the rise. Prices are climbing, clearance rates are strengthening, and confidence is returning. There’s a renewed sense of optimism, and for those waiting for the right moment to sell, this market momentum presents a unique window of opportunity. This could be the right time to take advantage of the market’s resurgence.

As we move further into 2025, all signs point to a strong and stable Melbourne market, with KPMG forecasting Melbourne house prices will rise 3.5% this year and units 4.7%. If you’re considering selling, now is the time to leverage this momentum. Get in touch with the team at Woodards to discuss how we can help you maximise your property’s potential.