Melbourne’s 2025 Property Market Outlook

A reduction in the cash rate could serve as a turning point, driving increased demand in the latter half of 2025. However, this is not guaranteed, as economists remain divided on Melbourne’s recovery prospects.

Forecasts for Melbourne’s property market in 2025 vary. SQM Research predicts a decline in values between -5% and -1%, while Domain’s analysis paints a more optimistic picture, forecasting 3% to 5% growth for house prices (units are expected to perform differently). This aligns with our expectations, as we anticipate quality homes in blue-chip areas will be the first to rebound, particularly if a rate cut occurs by mid-year. That said, we foresee significant variation in Melbourne’s market performance next year—true to our belief that there are markets within markets.

Factors Influencing Melbourne’s Recovery
One key driver underpinning Melbourne’s recovery is its increasing affordability. The city continues to offer strong property fundamentals, including excellent livability, access to amenities, and robust employment opportunities. None of these factors have changed.

Notably, Melbourne is also attracting more interstate buyers. In 2023, Ray White reported that 3.1% of Melbourne buyers came from other states. Now, that figure has nearly doubled to 5.8%, highlighting growing interest in Melbourne’s market.

While these fundamentals are encouraging, meaningful growth in Melbourne’s market may require regulatory reform. Unfortunately, we believe such changes are unlikely in the near term.

The 2025 Melbourne Rental Market

In 2025, renters are expected to display more selective preferences, prioritising well-maintained properties with comprehensive services. While rental price growth has moderated, the key to successful leasing outcomes remains fair pricing and high presentation standards.

The importance of quality property management has grown significantly as renters increasingly expect superior service levels and consistent property maintenance, an area we pride ourselves on at Infolio.

A notable gap persists in the affordable one-bedroom apartment segment, where demand continues to outstrip supply. This trend was particularly evident earlier this year when we were leasing the Union Quarter build-to-rent project in Spotswood.

The rental market is expected to remain highly competitive, driven by evolving renter expectations and supply dynamics across key property categories.

My parting piece of advice.
There are always numerous factors influencing the property market at any given time. For this reason, we consistently encourage clients to buy and sell within the same market to mitigate the risks of potential fluctuations. Attempting to time the market can be a risky strategy, particularly when there are strong indications that we are at the bottom of the current cycle now.

If you’re considering buying this year, now is the time to prepare. Book a free 15-minute discovery call, and we’ll ensure you’re ready to buy at the perfect time.

Lauren Staley
Managing Director
Infolio Property Advisors.