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Is the Melbourne Property Market Currently Strong?
It is well known that “spring time” in real estate marks an increase in activity and demand, whilst during the winter months we see lower sales volumes and buyer interest. However, what we are seeing currently in Melbourne is the market beginning to show signs that the spring buying season has started early when looking at the results from late June 2025.
For buyers trying to understand whether this early activity represents a genuine market shift, working with a buyers agent Melbourne can help clarify timing, suburb selection, and negotiation strategy.
What Has Sparked Activity in Melbourne’s Property Market?
Let’s start with the benefits Melbourne has seen from the two official Reserve Bank rate cuts — 0.25 percentage points in February and again in May. This has significantly improved borrowing capacity for both buyers and investors and has sparked renewed confidence in the markets.
It is expected that when mortgage rates edge down toward the mid-5% region by early 2026, demand will have really ramped up.
We have seen auction clearance rates climb to 72%, compared with 61% this same time last year, signalling a competitive environment typically seen later in the cycle and in spring, according to Domain Auction Results.
Why Are Investors Interested in Melbourne Again?
For the past few years, Melbourne has lagged behind Brisbane, Adelaide, and Perth, with Sydney always the front runner. However, since we’ve seen rates easing in early 2025, investors are pivoting back to Melbourne’s inner and middle suburbs where rental markets are tightening, vacancy rates have fallen to around 1%, and supply is limited.
Nationwide, there is a lot of interest in property investment as Australians just seem to love property, but the numbers also tell this story, with lenders reporting investment lending growth currently outpacing owner-occupier borrowing across the country.
This reinforces that investors appreciate the resilience of the Australian property markets, and are flexible with their home ownership with more and more young Australians turning to rentvesting, or buying their first property as an investment rather than a home, in order to get a foothold on the property ladder.
A buyers agent in Melbourne can help investors assess whether this renewed activity is supported by rental demand, suburb fundamentals, and long-term growth potential.
What Are the Seasonal Trends in Melbourne’s Market?
Typically, springtime sparks buyer activity with prices peaking between September to November, as families aim to settle before summer, Christmas and the new school year.
Spring will bring a higher number of listings, auctions become more frequent, and clearance rates climb steadily. In 2025, we are starting to see all these typical “spring time” markers come early for Melbourne and this is potentially an insight into what is to come for Melbourne’s spring selling season.
Why Is 2025 Different for Melbourne Property Buyers?
Rate Cuts
Rate cuts have driven a borrowing rebound. With increased borrowing power post interest rate cuts, buyers who were previously sidelined have returned early in the year, determined to get into the market whether it be a home or investment property.
Tight Rental Conditions
With Melbourne’s vacancy rates tightening, this is prompting investor urgency in inner and middle rings where rental demand is strongest.
The national vacancy rate sits at around 1.3% at the end of June 2025, making renting conditions tough across all states. Melbourne is around 1.8% as at June 2025, which is still considered very low.
Stock Shortages
New listings are down by around 7% year-on-year, keeping pressure on prices despite restrained supply.
Why Should Buyers Invest With Caution in Melbourne?
Not all Melbourne suburbs are equal.
Inner vs Outer Melbourne Suburbs
Inner and middle suburbs such as Yarra, Carlton, Fitzroy, Richmond, and Brimbank are currently attracting the most buyer demand for both investors and owner-occupiers.
Investors are brought in for the strong rental yields and owner-occupiers enjoy the various amenities and transport connectivity, making them highly desirable to young families.
Outer growth corridors, such as Melton, Wallan, Officer, Clyde North, and Clyde, remain value-oriented and attractive to some first-home buyers and investors, but they come with trade-offs: longer commute times, less established infrastructure, and potential oversupply risk in some new estates.
These suburbs provide a risky investment opportunity, but if you’re looking for a home, you might find some good value for your money.
Why Should Buyers Be Careful With Oversupplied Apartments?
Invest with caution. Melbourne has been renowned for oversupplied apartment towers, especially the off-the-plan developments that have been in abundance. If there is an oversupply, this means your investment will take quite some time to increase in value.
If you’re buying an apartment, it is best to seek quality, boutique buildings that have a smaller amount of apartments and are in well-located precincts, such as Elsternwick, Glen Eira, and Carlton, because these types of properties are more likely to perform.
Steer clear of apartment towers with high body corporate fees, poor designs, or lack of owner-occupier appeal because this will hamper the growth of your investment.
The best buyers advocate Melbourne can help buyers avoid weak apartment stock and focus on properties with stronger owner-occupier appeal, better location fundamentals, and lower oversupply risk.
What Should Investors Know About Victorian Land Tax?
Buyer beware. If you’re an investor looking to buy in Melbourne, it is important that you understand the significant change in the tax-free threshold for land tax. Note, your home is excluded.
The annual levy based on the site value of all taxable Victorian land held as at 31 December, excluding your home, charitable land or farming land is:
- Individuals: $50,000
- Trusts: $25,000
For 2025 assessments, the tax-free threshold has dropped dramatically.
Land tax progressive tax rates now apply. For instance:
- $50K–$100K: $500
- Up to $3M+: Up to 2.65% above higher bands
New absentee owner surcharge: Higher taxes apply to foreign or overseas-based owners, starting from 4% and climbing toward over 6% for high-value properties.
Also, this is reviewed on your combined holdings. This is important especially if you own multiple properties that will push you over the threshold. You can mitigate this by diversifying your investments across states, or you might consider ownership structuring options, such as holding via trusts or companies.
Final Thoughts
Working with a buyers agent Melbourne can help buyers approach Melbourne’s early spring revival with clearer research, stronger due diligence, and a better understanding of both the opportunities and risks in the market.
Disclaimer
Aus Property Professionals Pty Ltd retains the copyright in relation to all the information contained on its website and in this guide. This guide, and any content provided in addition, or linked to resources, is general information only and not investment advice.
As everyone’s individual situation is different, we advise individuals to always seek advice from relevant professionals such as legal, financial, accounting, and investing experts.
The intention of this guide is to be used for general information purposes only, in addition to your personal research and due diligence. We do not take any responsibility for any actions taken as a result of this guide as any actions should always be taken with consultation with relevant professionals who take individual circumstances into account.
Past performance doesn’t guarantee future results.
We have compiled the information contained in this guide from online resources, our research, and consultations, and we cannot guarantee the complete accuracy of this information, and we will always reference the resources where the data and information was derived.
