Melbourne’s housing market is showing clear signs of recovery after an extended downturn period that began following its peak in March 2022. Recent data from CoreLogic reveals steady improvements in market conditions, driven by supportive economic factors and shifting buyer sentiment.
Melbourne’s home values have been trending upwards for the past two months, indicating renewed strength in the market:
- March Growth: +0.5%
- February Growth: +0.4%
- Quarterly Growth (Jan-Mar 2025): +0.3%, equivalent to a roughly $2,700 increase in property values.
Note: Despite these positive gains, Melbourne dwelling values remain approximately 5.6% (or about $46,500) below the record highs seen in March 2022. the record highs seen in March 2022.
Melbourne housing market trends
The improvement in Melbourne’s market has primarily been driven by the housing segment, although units have also seen moderate gains:
| Property Type | March 2025 Change | Quarterly Change (Q1 2025) |
|---|---|---|
| Houses | +0.6% | +0.6% |
| Units | +0.4% | -0.2% |
Source: CoreLogic
Units showed improvement in March but remain slightly down overall in the quarter, reflecting mixed conditions in different market segments.
Market conditions have stabilized in terms of supply, although inventory levels remain elevated compared to historical averages:
- Listings compared to last year: +8.1%
- Listings compared to five-year average: +3.6%
The higher stock levels indicate that while buyer demand has strengthened, there remains ample choice in the market, potentially moderating price growth in the short term.
Melbourne house prices - the longer-term data
While a sustained recovery is underway, the market is expected to experience moderate rather than rapid growth. Interest rates, though anticipated to decrease gradually throughout 2025 (potentially down to a cash rate of 3.35%), will remain above neutral levels as per the Reserve Bank of Australia's forecasts. Consequently, significant upward pressure on prices is unlikely.
Instead, a balanced scenario is more probable:
- Gradual easing in monetary policy
- Improved market sentiment and household financial conditions
- Continued supply-side challenges limiting rapid price increases
Overall, Melbourne's housing market is on a positive trajectory, albeit moderate, driven by supportive economic conditions balanced by lingering affordability and supply constraints.
You may also want to read: National Housing Market Update 
