Key takeaways
Melbourne has posted four consecutive months of home price growth so far in 2025.
This represents a notable turnaround as Melbourne property prices fell in most months of 2024.
Melbourne remains a top long-term investment city, backed by strong population growth, infrastructure spending, and a diversified economy.
Now is a countercyclical opportunity to invest, with prices still below peak levels and buyer confidence returning as interest rates are expected to fall.
Not all suburbs will perform equally — inner- and middle-ring suburbs with owner-occupier appeal and tight supply are primed for growth.
Avoid off-the-plan and high-rise apartments, which often underperform due to oversupply, lack of scarcity, and weak demand from quality tenants.
Well-located, family-friendly houses and townhouses in gentrifying suburbs offer the best balance of capital growth and rental income.
The Melbourne market is undersupplied, with building approvals at record lows, migration surging, and vacancy rates at historic lows.
Smart investors are taking a strategic, long-term view, focusing on investment-grade properties with strong fundamentals — not chasing short-term fads.
Melbourne’s property cycle is turning, and those who act now are likely to benefit as momentum builds in 2025 and beyond.
Are you considering investing in Melbourne’s property market?
You’re not alone — and you’re certainly not too late.
Melbourne has posted four consecutive months of home price growth so far in 2025. This represents a notable turnaround as Melbourne property prices fell in most months of 2024.
Melbourne continues to rank as one of Australia’s most desirable cities for property investors, and for good reason.
It’s a world-class, vibrant, and growing city with strong population growth, a diverse economy, and a robust long-term property market performance.
After the challenges of recent years - interest rate hikes, construction bottlenecks, and affordability concerns - savvy investors are now seizing this opportunity to buy into Melbourne while the market is still in recovery mode.
But here’s the thing: not all Melbourne suburbs make good investment locations, and not all properties will outperform.
The secret to successful property investment in Melbourne isn’t just about buying in the right city — it’s about purchasing the right property in the right suburb at the right time… and holding onto it for the long term.
In this comprehensive guide, I’ll share everything you need to know about investing in Melbourne in 2025 and beyond — from the best-performing suburbs and price trends to the current state of the property cycle, as well as what types of properties are likely to deliver strong capital growth and rental returns.
Is Melbourne a good place to invest?
Over the past four decades, Melbourne has been Australia’s strongest-performing housing market; however, in the last couple of years, it has underperformed.
In fact, over the past 12 months, dwelling prices have remained largely stagnant, while many other capital cities experienced double-digit capital growth.
Melbourne's property values remain 4.5% below their peak in March 2022.
Source: Proptrack
What this enormous divergence in growth has meant is that home prices in Melbourne are now low relative to other capital cities.
Source: Proptrack
This is a recent phenomenon. For most of the 2010s, Melbourne was more expensive than the smaller capitals – with the three cities around 20-40% cheaper for much of the back half of the 2010s.
In Perth, prices were briefly higher in the early 2010s on the back of the mining investment boom, which saw an enormous surge in home prices out west.
Note: Median prices are not a perfect comparison of housing costs: the types of homes in Melbourne differ from the types of homes in Adelaide Perth and Brisbane, so we are not comparing like-for-like as there are many more apartments in Melbourne.
However, market sentiment has improved now that interest rates have begun to fall, and Cotality (previously Corelogic) reports that Melbourne house prices have risen for the last four months.
Here is the latest Cotality data on the median property prices for Melbourne.
| Property | Median price | Δ MoM | Δ QoQ | Δ Annual |
|---|---|---|---|---|
| All dwellings | $791,303 | 0.4% | 1.2% | -1.2% |
| Capital city houses | $939,965 | 0.5% | 1.2% | -1.0% |
| Capital city units | $614,689 | 0.4% | 1.2% | -1.6% |
| Regional dwellings | $581,981 | 0.6% | 1.3% | 0.1% |
Source: Cotality, 1st June 2025
Note: The fact that the Melbourne housing market has not performed as strongly as some other capitals over the last year creates a window of opportunity for strategic property investors as Melbourne property values have significant upside potential.
The average price of a Melbourne standalone house is the lowest it has been against its Sydney equivalent in around twenty years, and a significant deviation from the average discount over the past decade (29%).
Sydney has consistently commanded a premium over Melbourne, but recently this premium has reached historic extremes.
The latest data show the typical house in Sydney currently fetches a 70% premium relative to the typical house in Melbourne, or put differently median house prices in Melbourne are approximately 41% cheaper than in Sydney.
This gap represents a difference of more than $600,000 in median house prices.
This means that there is significant "inbuilt equity" in the undervalued Melbourne housing market at present, but not all Melbourne property is created equal - you need to know where to buy, what to buy and what suburb is ripe for investment.
One thing is becoming clear, if you wait around until interest rates fall further, all you’ll be doing is playing tug-of-war with owner occupiers over the best properties for sale.
On the other hand, buying properties below replacement cost in a market poised for recovery could yield substantial returns as interest rates eventually fall further.
Not only will strategic investors benefit from Melbourne’s long-term growth, but they will also get a “free kick” as the Melbourne property market catches up and reverts to its loan term mean growth rates.
Why the underperformance of the Melbourne market?
There are various reasons why the Melbourne property market has been underperforming but the main ones have been lack of consumer confidence and poor state economic activity.
These are two major factors that affect our housing markets.
Some commentators still blame the harsh COVID lockdowns imposed at the height of the pandemic, which influenced some people to move to the regions. However, in my mind, that was five years ago and is not relevant today.
I believe Melbourne's underperformance is related to a lack of confidence in the state government and its poor economic performance.
Victoria has experienced significant economic setbacks, particularly evident in the net reduction of 7,606 businesses during the financial year 2022-23, according to the Australian Bureau of Statistics.
One of the main reasons for the decline in business numbers in Victoria is the aftermath of the state's extensive lockdowns.
Another critical factor is the increased tax burden on businesses.
The Victorian government introduced a payroll tax surcharge in the 2021-22 State Budget as part of a “mental health and wellbeing levy”, targeting businesses with a payroll of $10 million or more.
This was followed by a further increase in payroll taxes in the 2022-23 State Budget as part of a 10-year COVID debt levy to repay the government’s substantial borrowing during the pandemic.
The economic struggles of Victoria have had a direct impact on the property market. Where the economy and jobs go, the property market follows.
At the same time…
Property investors have been getting disillusioned with Melbourne
Despite the state’s housing shortage and rental crisis, the Victorian government has made a habit of using property as a cash cow to plug its budget deficits.
It has introduced a cocktail of taxes that actively disincentivise the very investors needed to increase housing supply.
And to make matters worse, landlords now face some of the country’s most rigid tenancy laws—at a time when risks and holding costs have never been higher.
Here’s a quick summary of the most impactful changes:
- Land Tax Changes (from 1 January 2024):
The land tax-free threshold for absentee owners and investors was reduced from $300,000 to $50,000, meaning many “accidental landlords” and small investors are now being hit with annual bills they never had before.
A new fixed fee of up to $975 was introduced, plus an additional 0.10% land tax hike for properties over $300,000 in value.
- Vacant Residential Land Tax (from 1 January 2025):
Originally confined to inner and middle Melbourne, this tax is now being expanded statewide. If your property is vacant for more than six months in a year, you’ll be taxed—regardless of location.
This hits holiday homes, development sites, and homes undergoing long-term renovations.
- Windfall Gains Tax (in effect from 1 July 2023):
This little-known but highly punitive tax imposes up to 50% on the uplift in land value following rezoning. This particularly hurts small developers or landowners in growth corridors who aren't even selling, just holding.
- Emergency Services Levy (ESL):
Once a modest line item on council rates, the ESL has ballooned in recent years. In effect, it’s a quasi-property tax, with property owners footing the bill for fire and emergency services via their annual rates notice.
Importantly, it’s not income-tested, nor does it reflect the property's risk profile—landlords in low-risk suburbs still pay disproportionately.
Combined, these taxes can easily add thousands, even tens of thousands of dollars to an investor’s annual holding costs.
Tenancy Reforms: Too Much, Too Fast
But the pain doesn’t end with tax policy.
In 2021, Victoria rolled out 132 amendments to the Residential Tenancies Act—many of which significantly shifted the power dynamic between landlords and tenants. And more have been added recently.
Here are some of the key changes that have left landlords feeling handcuffed
- Harder to End a Tenancy
Landlords can no longer end a tenancy without reason. The “no reason notice to vacate” was scrapped.
Now, landlords must rely on a very narrow list of prescribed grounds, such as moving in themselves or planning a full renovation. And even then, it must be genuinely provable.
- Maintenance & Modifications
Tenants can now make a wide range of modifications—like mounting TVs, installing child safety devices, or replacing curtains—without landlord consent.
For more substantial changes, landlords cannot unreasonably refuse consent, and in many cases, must foot the bill for repairs and maintenance more promptly.
- Pets in Rentals
Tenants can request to keep pets in a property, and landlords can’t say no unless they have VCAT approval.
And good luck getting that approval—it’s rarely granted unless there’s a compelling reason (such as body corporate restrictions or property damage risks).
- Disclosure & Compliance Burdens
The legislation introduced a mountain of compliance obligations: electrical, gas, and smoke alarm checks must be done every two years, with proof required.
Landlords must also provide energy-efficient heating, minimum standards for insulation, and upgraded locks—costing thousands in some cases.
- VCAT Tilted Against Landlords
VCAT (Victorian Civil and Administrative Tribunal), which adjudicates tenancy disputes, has increasingly been criticised as tenant-leaning.
Disputes over rent arrears, property damage, or eviction can take months to be heard, and even longer to enforce.
These changes have created the perfect storm for Victorian landlords. Many are selling up, particularly in regional areas or the outer suburbs where rental yields were already marginal.
But here’s the irony: the same government that’s taxing investors out of the market is relying on them to provide rental housing.
Private landlords make up over 90% of rental supply in Victoria. As they exit the market, rental vacancies shrink, and rents continue to surge.
We’re already seeing the consequences.
Melbourne’s vacancy rate is under 1% s and asking rents have jumped more than 25% year-on-year in some suburbs.
The government wants to cool rents, but their own policies are fanning the flames.
And while it hasn’t made big headlines just yet, if you read between the lines, it points to a worrying trend for renters, a turning point for policymakers, and a potential opportunity for long-term investors who know how to read the market.
The latest data from Victoria’s Residential Tenancies Bond Authority (RTBA) has quietly revealed a tipping point: more rental bonds are being refunded than lodged.
Source: abc.net.au
Now, that might sound technical, but here’s what it means in plain terms: More rental properties are being removed from the rental market than are being added.
This hasn't happened since the RTBA started recording this data over 20 years ago.
It’s not just unusual, it’s unprecedented.
In the March 2025 quarter, there were 3,398 more bond refunds than new bond lodgements in Victoria.
Source: abc.net.au
Note: Note: That means thousands of rental properties were taken off the market in just one quarter.
To put that in perspective, Victoria usually sees a positive balance, with more new tenancies starting than ending.
That’s how a growing rental market should behave, especially in a state with strong population growth, thanks to immigration and internal migration.
However, this time the numbers are reversed.
And it’s not just a single-quarter anomaly. The trend has been building for months.
Real estate agents and property managers have been reporting a growing number of landlords choosing to sell up, and now the data backs it up.
The long-term opportunity for strategic investors
While the headlines are painting a picture of doom and gloom, savvy long-term investors will recognise this environment for what it truly is:
A clearing-out of less committed landlords that will tighten supply, lift yields, and create opportunities for those who know what they’re doing.
Here’s why:
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Less competition means fewer investors bidding up prices on quality assets.
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Rising rents improve gross yields and cash flow, especially for those who bought before interest rates peaked.
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The pipeline of new housing is drying up, thanks to high construction costs, labour shortages, and development delays.
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Population growth is rebounding, particularly in Melbourne, which remains Australia’s fastest-growing city.
Note: In short, the fundamentals are strengthening, despite short-term noise.
Despite the current struggles, there are significant opportunities in Melbourne's property market.
Property prices are considerably below replacement costs, creating a unique buying opportunity.
In fact, this situation is similar to where Brisbane and Perth were three years ago.
Back then, both cities were experiencing a period of underperformance, but those who bought during that time have since seen significant capital growth as the markets recovered.
Even though some short-term investors have exited the market, we’re witnessing a growing number of interstate investors viewing the current market as a window of opportunity.
I’ve been around long enough to see this pattern play out before.
The best opportunities often emerge from assets that have experienced a period of underperformance, while the biggest risks often lie in those that have been running hot.
This isn’t to say that any Melbourne property is guaranteed to outperform, but it's time to remember the saying: "Be greedy when others are fearful, and fearful when others are greedy."
At Metropole Melbourne we’re finding that strategic investors and homebuyers are back actively looking to upgrade, picking the eyes out of the market.
It is clear that Melbourne has been constrained by several factors that are transitory in nature, and over the longer term, that will either improve under a new government or be integrated into market expectations.
At the same time, the long-term fundamentals of Melbourne remain sound with strong population growth, a diverse economy with robust industries and employment opportunities, an increasing knowledge based economy and significant new infrastructure in the pipeline, making Melbourne one of the most liveable cities in the world.
Cheaper properties were recording stronger price growth
Over the past two years, Melbourne's property market has experienced varied performance across different price segments, influenced by economic factors, policy changes, and shifting buyer preferences.
As I explained, Melbourne dwelling prices are still slightly below their 2022 peak. Over the last few years, more affordable properties (in the bottom quartile) have outperformed, as there was a shift towards outer suburban areas, where supply was greater and prices were lower.
Here's a breakdown of how properties in various price points have fared:
- High-End Properties ($2M+)
While, in general, the upper end of Melbourne's property market has struggled over the last couple of years, luxury properties in some of Melbourne's prestigious suburbs, such as Toorak, Balwyn, Brighton and Camberwell, have shown resilience and, in some cases, significant growth.
For instance, 25 Melbourne suburbs experienced median house price increases exceeding $100,000 in 2024, with Deepdene recording a remarkable $602,000 (20%) rise.
Factors contributing to this performance include limited supply, strong demand from affluent buyers, and the desirability of established, blue-chip locations. - Mid-Tier Properties ($800K–$1.5M)
The mid-tier market, encompassing many family homes in Melbourne's middle-ring suburbs, has faced challenges.
After peaking in early 2022, prices in this segment declined by approximately 7.9% through to January 2023 .
While there was a modest recovery in early 2023, growth remained sluggish throughout 2024, with annual changes hovering around -1.2%.
Contributing factors include increased interest rates, higher property taxes, and a cautious buyer sentiment.
But this segment of the market has picked up in the last few months due to increased buyer confidence and demand at the time when there is limited supply - Affordable Properties (Under $800K)
The affordable segment, often comprising apartments and entry-level houses in outer suburbs, has experienced mixed results.
While some areas saw price declines due to oversupply and reduced investor activity, others benefited from first-home buyer incentives and infrastructure developments.
More recently, apartment prices in Melbourne have been increasing, as have the value of villa units in Melbourne’s inner suburbs. At the same time, house prices in outer suburbs are increasing as investors and first homebuyers are getting into the market before the expected surge of activity early in 2026 when the first home bueyer grants kick in.
Back then, both cities had experienced a period of underperformance, but those who bought then have since enjoyed significant capital growth as these markets recovered.
This suggests that as interest rates continue to decline, and when Melbourne regains its Mojo, the Melbourne housing market is likely to outperform other capital cities, driven by strong population growth, economic recovery, and relative affordability.
Despite confidence returning as interest rates fall further and more buyers return to the Melbourne property market, affordability will still be an issue for many potential buyers, and buyers will only be able to pay up to the limit of what they can afford, so I would only invest in locations where wages are increasing faster than average and residents have multiple streams of income, not just wages.
This means it will be important to invest in Melbourne's more affluent inner-ring and gentrifying middle-ring suburbs, which are expected to outperform the cheaper suburbs, where residents will still struggle to afford a home.
What is the Victorian government going to do about the situation?
Recently the Victorian government has stepped up to encourage more housing supply with two key policies designed to give developers a push to build.
Firstly, from October 21, 2024, there has been be a 12-month reduction in stamp duty for off-the-plan units, townhouses, and apartments - regardless of the price tag.
This should make these properties more attractive to both developers and buyers.
Secondly, to boost density around public transport, the government has identified 50 new activity centres where it will streamline the planning process for multi-storey residential developments.
The goal is to fast-track much-needed housing in these areas.
Now, when we look at the numbers from the ABS, things are a bit concerning.
Currently, there are about 63,700 dwellings under construction across Victoria—this is 11% fewer than what we observed a year ago, and most of that decline is attributed to the slowdown in high-density apartment projects.
While detached houses under construction are still above the 10-year average, they've fallen by 19% over the past year.
If you look at the bigger picture, 2024 is likely to see the lowest level of new housing completions in Victoria in the last decade, and new housing starts are continuing to decline.
The approval pipeline isn’t looking great either—approved dwellings in Victoria are sitting 14% below the 10-year average. This all points to a further tightening supply in the near future.
On the flip side, demand is booming.
Victoria’s population is growing at near-record levels, increasing by over 183,000 people in the 12 months to March 2024, which is the biggest jump of any state in Australia.
A big driver of this has been overseas migration, and for the first time since 2020, Victoria has also managed to attract people moving from other states.
In terms of housing finance, things are also picking up. Investors, in particular, are making their presence felt, now accounting for 32% of total housing finance in Victoria, up from 27% just three years ago.
With rental growth continuing strong and the housing shortage becoming more acute, I expect investors to take an even larger share of housing loans moving forward, as affordability challenges push owner-occupiers out of the market.
It’s an interesting dynamic—demand is as strong as ever, but the supply side is struggling to keep pace.
This imbalance will continue to put upward pressure on prices and rents in the months ahead.
The best performing properties in Melbourne in 2025
Family-Friendly Homes
Price growth of established houses in Melbourne’s gentrifying suburbs will be underpinned by the ongoing trend of families seeking spacious homes with proximity to amenities, schools, parks, and transport links that continue to fuel demand for houses.
With Melbourne’s population growth back on the rise due to both domestic and international migration, family-oriented homes in established suburbs will maintain strong demand.
3-4 bedroom houses with larger land components, ideally with some potential for renovation or minor upgrades, will attract families and grow in value.
Middle ring eastern suburbs such as Mount Waverley, Glen Waverley, Mitcham, Blackburn, and Ringwood are enjoying gentrification and infrastructure upgrades, and remain more affordable than inner suburbs, and therefore experiencing strong owner occupier demand to push up prices as well as rental demand.
In the west, Essendon and Moonee Ponds are popular suburbs among families and professionals alike and provide easy access to the CBD, reputable schools, and ample lifestyle amenities.
In the south east, Bentleigh and bayside suburbs like Cheltenham, Mentone and Parkdale are experiencing strong demand as they go through gentrification.
Townhouses and Villa Units
Townhouses are becoming an increasingly popular form of accommodation for young families, offering a compromise between apartments and houses.
With affordability pressures still high, many buyers and renters prefer townhouses as a more cost-effective option compared to standalone houses.
The trend toward higher-density living in inner and middle-ring suburbs will continue to make townhouses an appealing choice for investors.
Melbourne’s gentrifying, middle ring suburbs are great locations in which to buy townhouses, including Bentleigh and McKinnon in the south east, Reservoir and Preston in the north and Mount Waverley and Glen Waverley in the east.
Similarly, villa units in Melbourne’s inner suburbs are excellent investments, as they are popular among young families and older couples.
Established apartments in Premium Locations
Well-located "family friendly" two-bedroom apartments are seeing renewed interest.
This is particularly true in areas with strong rental demand, especially from young professionals, students, and downsizers.
Look for properties in low-rise, boutique developments that offer unique features and modern finishes, spacious layouts, and access to amenities such as cafes, restaurants, public transport, and green spaces.
Where to avoid buying in Victoria.
While I see many suburbs poised for strong growth over the next couple of years, there are some areas I would avoid as they carry risks of poor capital growth, low rental growth, and economic instability.
- Outer suburbs. While Melbourne's outer suburbs offer cheaper properties, they often lack the infrastructure and amenities needed to attract future home buyers (who will push up the value of your property) and long-term tenants.
While many property marketers discuss significant growth in areas like Melton, Bacchus Marsh, and Werribee South, this actually reflects population growth and abundant new development, but not necessarily capital growth. With limited infrastructure and a lack of local transport, schools, and healthcare services, these locations are likely to underperform in the long term. - Regional Victoria.There is no doubt that some large Victorian regional centres will continue to grow strongly; however, with a majority of population growth and economic growth occurring in the capital city of Melbourne, I would advise against investing in regional Victoria.
- High crime rate areas. When considering property investment in Melbourne, it's crucial to assess not only the potential for capital growth and rental yield but also the safety and crime rates of the area. High crime rates can impact tenant demand, property values, and overall investment returns.
You can check the latest prime rate statistics around Victoria at this government website.
Interestingly, the Melbourne CBD, South Melbourne, Docklands, and the inner suburbs of Fitzroy and Collingwood have relatively high crime rates. And not surprisingly, some of the low socio-economic areas, such as Broadmeadows, Campbellfield, and Dandenong, are also challenged by high crime rates
What's happening in the Melbourne Property Market?
Source: SQM Research
On the other hand, the Melbourne auction market started the year strongly showing a significant depth of buyers in the market and has continued to deliver steady auction clearance results.
While the data is insightful, as we know, Melbourne’s market is not a one-size-fits-all property market and A-grade homes and investment-grade properties remain in strong demand and are likely to outperform, many holding their values well.
There is a clear flight to quality with A-grade homes and investment-grade properties still in short supply for the prevailing strong demand, but B-grade properties are taking longer to sell and informed buyers are avoiding C-grade properties.
This is creating a window of opportunity for homebuyers and property investors with a long-term perspective.
Sure, many discretionary buyers and sellers have left the market at present, but life will go on in the Victorian capital – people will get married, people will get divorced, families will have babies and many Melbournians are going to need to move house.
When they realise interest rate rises have stopped (and we're possibly there already) and that inflation is under control (and we're past the peak already) they will come back into the market with a vengeance.
Melbourne’s rental markets remain exceptionally tight
Vacancy rates in Melbourne’s rental market are usually very tight, often sitting below the national baseline.
And thanks to soaring demand and a severe undersupply across Victoria, and the rest of the country, the national vacancy rate is exceptionally low today by historical standards.
SQM Research reports Melbourne’s vacancy rate at 1.5%.
By comparison, the vacancy rate which represents a balanced market, is around 2-2.5%.
Source: SQM Research
Of course, this isn’t news.
As we know, Melbourne’s rental market, like most places across the country, has plunged into crisis.
Near-record-low vacancy rates, high rent prices, strong demand, and a rising population have combined to push the city’s market into a high-pressure cooker environment.
The data for vacancy rates and also weekly rent listings highlights that the distressing state of Melbourne’s rental market leads to a bleak outlook for renters.
Source: SQM Research
Melbourne's decline in vacancy rates and number of rental listings can be attributed to two factors:
- One major factor is the city's strong economy and job market. Melbourne is home to a number of major industries, including finance, technology, and healthcare, which are driving the demand for housing.
- Another factor is the city's growing population. Melbourne's population has been growing steadily in recent years, with more people moving to the city to take advantage of its job opportunities and quality of life.
This increased demand for housing has led to competition among renters, driving down vacancy rates.
Overall, the decline in vacancy rates in Melbourne is a sign of the city's strong economy and growing population.
While it may be more difficult for renters to find a property, the city remains an attractive place to live and work.
Key trends for Melbourne’s housing market 2025 and beyond
The Melbourne property market has been one of the strongest and most consistent performers over the last four decades.
After booming through 2020 and 2021 with prices rising by 15.8%, Melbourne housing values fell -7.9% from their peak in March 2022 through to the recent trough in January 2023 and is now exhibited a number of months of property price growth?.
And there are firm indications that Melbourne property values and rents will continue to grow throughout the rest of 2025 and well into the next few years.
The level of new dwellings completed in Victoria in 2025 is likely to be the lowest level in 10 years with the current level of approved dwellings in Victoria 15% lower than the 10-year average.
Supply will not keep up with demand from all the new immigrants coming to Melbourne, and boosted by below-average vacancy rates, Melbourne residential rental rates grew by more than 9% for both houses and units over the past 12 months.
Melbourne's population growth vs. housing market
Note: Projected population growth will continue to support Melbourne’s recovery, but will also pose problems.
Currently, there are 5.8 million people living in Melbourne, and 6.8 million in Victoria.
Victoria experienced the biggest population increase over the year to September 2024 (the latest ABS stats available.)
This can mostly be accounted for by a steady inflow of interstate and international arrivals and a subdued number of Victorians leaving the state (compared to other states which have had higher arrivals but also higher departures).
| Population at 30 September 2024 ('000) | Change over previous year ('000) | Change over previous year (%) | |
|---|---|---|---|
| New South Wales | 8511.2 | 120.8 | 1.4 |
| Victoria | 7013.0 | 146.7 | 2.1 |
| Queensland | 5608.7 | 111.9 | 2.0 |
| South Australia | 1882.7 | 21.5 | 1.2 |
| Western Australia | 2981.8 | 72.6 | 2.5 |
| Tasmania | 576.0 | 1.9 | 0.3 |
| Northern Territory | 255.6 | 1.7 | 0.7 |
| Australian Capital Territory | 475.6 | 6.9 | 1.5 |
| Australia (a) | 27309.4 | 484.0 | 1.8 |
Source: ABS data
And the population growth is expected to continue. According to the original Plan Melbourne 2017–2050, the Victorian capital’s population was forecast to leap from 4.5 million (as at the time of the plan’s launch) to at least 8 million by 2050,
But more recent updates by Planning Victoria suggest we’re now hurtling toward the 9 million mark, overtaking Sydney much sooner than anticipated
And Victoria’s total population is set to top 10 million by 2051.
This isn’t just fast—it’s unprecedented for an Australian city.
The key drivers?
- A surge in overseas and interstate migration
- Natural population growth
- Melbourne’s magnetic liveability, job prospects, and international education appeal
But here’s the kicker: Melbourne will need 1.6 million new homes to accommodate this influx, along with 1.5 million new jobs.
The city's transport network will need to cater for around 10 million more trips a day – that’s an increase of more than 80%.
It will require vastly expanded infrastructure and a reimagined urban form to protect its liveability and sense of community.
But here’s the silver lining: if the government gets it right and plans well, Melbourne won’t just be bigger—it will be better.
Plan Melbourne envisions a city of 20-minute neighbourhoods, job-rich suburbs, and sustainable design.
That’s a future worth investing in.
In fact, I recommend getting into the Melbourne property market before those other 4.5 million people come to Victoria.
Top 10 Melbourne suburbs where property has earned more than the average worker
Overall Melbourne property prices grew by at modest levels over the last year.
But in the exclusive inner-Melbourne suburbs of Toorak and South Yarra, houses still gained more than the average wage at $237,486 and $136,311 respectively.
Meanwhile, suburbs east of the city in Canterbury, Balwyn and Surrey Hills also saw house values jump by $160,638, $156,400 and $125,312 respectively.
Further east the data was also impressive.
House prices in Wheelers Hill, Park Orchards, Lysterfield and Doncaster East increased $115,706, $103,194, $101,332 and $99,385 respectively over the year, all more than the average Australian wage.
Top 10 earners in Victoria
| Suburb | Region | AVM 12 months ago | Current AVM | Change ($) |
|---|---|---|---|---|
| Toorak | Melbourne - Inner | $4,148,336 | $4,385,822 | $237,486 |
| Canterbury | Melbourne - Inner East | $3,121,281 | $3,281,919 | $160,638 |
| Balwyn | Melbourne - Inner East | $2,702,699 | $2,859,099 | $156,400 |
| South Yarra | Melbourne - Inner | $1,891,053 | $2,027,363 | $136,311 |
| Surrey Hills | Melbourne - Inner East | $2,163,709 | $2,289,021 | $125,312 |
| Mont Albert | Melbourne - Inner East | $2,077,778 | $2,200,017 | $122,239 |
| Wheelers Hill | Melbourne - South East | $1,301,619 | $1,417,325 | $115,706 |
| Balwyn North | Melbourne - Inner East | $2,102,890 | $2,214,560 | $111,670 |
| Middle Park | Melbourne - Inner | $2,682,799 | $2,790,123 | $107,325 |
| Park Orchards | Melbourne - Outer East | $1,900,536 | $2,003,730 | $103,194 |
Source: PropTrack/realestate.com.au
Melbourne’s housing market - the forecast for 2025
Digging deeper into the stats, some Melbourne properties - bearing in mind there are multiple markets within markets - have far out performed others.
- Also read:Melbourne property market forecast for 2025 | Is it a good time to invest in Melbourne?
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – June 2025
- Also read:Latest property price forecasts for 2025 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Brisbane Property Market Forecast [2025] – What’s Ahead & Where to Invest
- Also read:Sydney property market forecast for 2025. Is it a good time to invest in Sydney?
It really is a tale of two cities - while some properties over-perform, others underperform.
But the expert consensus is that strong population growth and tight supply will continue to push property prices upwards as we move through this next stage of the property cycle.
While Melbourne’s property market has lagged behind Sydney and Brisbane, there are clear indicators that it will continue on its upward trajectory.
Here is the most recent forecasts from Dr. Andrew Wilson, chief economist of My Housing Market:
Oxford Economics recently made the following forecasts of where house prices will be in 3 years time.
As you can see, they expect very strong property price growth for both houses and units in Melbourne over the next three years as Melbourne reverts back to mean long-term growth rates.
3-year property price forecast (by June 2027)
| City | Median price | Total price growth | ||
|---|---|---|---|---|
| Houses | Units | Houses | Units | |
| Sydney | $1.93M | $1.09M | 18% | 22% |
| Melbourne | $1.28M | $0.78M | 21% | 20% |
| Brisbane | $1.21M | $0.71M | 19% | 23% |
| Adelaide | $0.95M | $0.69M | 16% | 18% |
| Perth | $1.05M | $0.64M | 30% | 30% |
| Canberra | $1.17M | $0.75M | 19% | 20% |
| Hobart | $0.86M | $0.71M | 13% | 16% |
| Darwin | $0.7M | $0.46M | 24% | 26% |
Source: Oxford Economics, PriceFinder
Ready to Invest in Melbourne?
If you’re looking to grow your wealth safely and strategically, now’s the time to talk to the team at Metropole Melbourne.
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