Michael Yardney , Founder
After a period of correction, the Melbourne property market is finding its feet again, but don’t expect fireworks just yet. The latest data for August 2025 paints a picture of a measured and steady recovery, marking a clear departure from the volatility of recent years. It’s a “slow burn” rather than a roaring fire, favouring stability over speculation.
For the sixth consecutive month, Melbourne dwelling values have crept upwards, recording a 0.4% rise in July. While modest compared to some other capitals, this consistent growth signals a strengthening foundation for the market. Since the recovery began in February, coinciding with the first interest rate cut, Melbourne values have lifted by 2.8%.
In real terms, this adds up to a respectable $22,570 increase to the median dwelling value this year. However, it’s crucial to maintain perspective. The market is still in recovery mode, with values remaining 3.4% (approx. $28,000) below the record highs we saw back in March 2022.
Melbourne housing market trends
| Period | Property Price Dynamics |
|---|---|
| 3 months | 1.2% |
| 12 months | 0.5% |
| Avg. annual growth (past decade) | 3.4% |
Source: Cotality Australia
The trend of houses outperforming units continues to be a defining feature of Melbourne’s market. Buyer demand remains skewed towards detached homes with more space.
- Melbourne House Values: Up 2.8% in the first seven months of 2025.
- Melbourne Unit Values: Up a more modest 1.2% over the same period.
| Metric | Price |
|---|---|
| Median dwelling value | $893,424 |
| Median house value | $952,339 |
| Median unit value | $621,281 |
Source: Cotality Australia
Insider’s Note: This performance gap reflects a lingering post-pandemic preference for space and lifestyle. While affordability pressures are pushing some buyers towards units, the demand for a classic Melbourne backyard remains strong. For investors, this highlights the higher rental yields currently available in the unit sector (4.9% vs 3.2% for houses).
For those renting in Melbourne, conditions remain challenging. The city’s vacancy rate is incredibly tight at just 1.5% in July, keeping upward pressure on prices. Rents nudged 0.2% higher over the month, and while annual rental growth is softer than in other cities, the lack of available properties is the dominant story.
| Rental Rates & Yields | Houses | Units |
|---|---|---|
| Median weekly rent | $575 | $575 |
| Gross rental yield | 3.2% | 4.9% |
| Annual change in rent | 0.7% | 1.7% |
Source: Cotality Australia
Melbourne house prices – the longer-term data
Melbourne’s property market is on a path to a sustainable recovery. The era of double-digit growth is behind us, replaced by a more stable, albeit slow, upward trend.
The outlook remains positive, with expectations for values to continue “posting a broad-based but modest rise through the rest of the year.“ On balance, the positive forces of lower rates and low supply are likely to win out, providing a foundation for continued growth into 2025.
For buyers, the environment is less frantic, but affordability remains a challenge. For sellers, the low supply is an advantage, but pricing needs to be realistic to meet the market. As we move through the rest of the year, expect this theme of modest, steady growth to continue.
