“Melbourne values climb for second straight month”
Hi everyone, I’m Jason Mudford from OBrien Real Estate with the fourth edition of the property news for 2025.
After a long period of subdued activity, Melbourne’s property market has delivered its second month of price growth, signalling a potentially encouraging shift in momentum. In March, dwelling values in Melbourne rose by 0.5%, following a similar result in February. That means values have risen 0.9% across the past two months, a welcome sign for sellers and a reflection of improving buyer sentiment in the wake of February’s interest rate cut.
Despite the uptick, Melbourne’s home values remain 5.6% below their peak, which was reached back in March 2022. However, the outlook is more optimistic than it has been in over a year, with more buyers entering the market and mortgage affordability marginally improving. For context, the current median value for all dwellings in Melbourne now sits at $781,318.
Australia’s annual inflation rate, was 2.4% in the 12 months to February 2025 with trimmed mean inflation (a key underlying measure) being 2.7%, down from 2.8% in January. The CPI excluding volatile items and holiday travel was also 2.7%. This marks a significant improvement from the peak of 7.8% in late 2022. The RBA announced its decision to keep the cash rate on hold on April 1, maintaining the current rate following February’s 0.25% cut.
Stable inflation, coupled an easing rate cycle, is helping to support confidence in the property market.
It’s not just Melbourne seeing a lift—Regional Victoria has also joined the recovery, with dwelling values rising 0.4% in March, following a 1.4% increase over the quarter. Although regional growth has been stronger than the capital over the past 12 months, the two markets are starting to move more closely together again.
The median home price in Regional Victoria now sits at $574,298. While still well below metro Melbourne, yields and affordability in the regions continue to attract interest from both lifestyle-driven buyers and investors.
On the rental front, rents in Melbourne increased by 0.3% in March, the smallest rise among the capitals, but still a continuation of the trend. Annual rental growth has eased to 3.2% for units and 2.9% for houses, a notable softening from last year’s highs.
With rents rising and property prices only just beginning to lift, rental yields are also strengthening. These returns, coupled with ongoing population growth and limited new supply, are helping drive renewed investor interest.
While it’s still early days, Melbourne’s consecutive monthly gains are the most promising signs we’ve seen since mid-2022. Regional Victoria remains steady and attractive, particularly from an investor perspective. Buyers appear to be adjusting to the new normal of interest rates and are responding positively to more favourable lending conditions.
The broader market outlook will depend on future decisions by the Reserve Bank which next meets in May, but for now, the early signs of 2025 are giving us reasons to be optimistic.
Remember, the information provided is of a general nature – always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.
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