Melbourne Economic Update – September 2025

Melbourne Property Market: Recovery Turns Robust

Melbourne’s property market has moved well beyond recovery, with prices now rising consistently each month.

In September, dwelling prices increased by around 0.5%, bringing year-to-date growth above 3%. The median house price now sits just under $800,000, and projections suggest it could reach $810,000 by December. This reflects a steady rebound from the declines seen in 2023 and 2024.

While growth is steady, whether it accelerates further depends on how the market absorbs available stock and how supply and demand evolve.

Auctions Signal Strong Demand

Auction clearance rates have remained above 70% for much of the past quarter, even as auction volumes fluctuate. Unsold properties have fallen sharply, indicating that buyers are actively absorbing stock.

This balance between supply and demand has been a major factor supporting consistent price growth and reflects a market moving from cautious recovery into more robust momentum.

Migration Driving Market Momentum

Population growth is contributing significantly to demand. Net overseas migration jumped sharply in the March quarter, while net interstate migration turned positive for the first time since 2019.

This renewed inflow of residents is helping to absorb remaining excess stock and placing upward pressure on housing demand, supporting the ongoing recovery.

Rental Market and Lending Trends

Melbourne’s rental market has remained balanced, with median rents steady at $580 per week and vacancy rates hovering around 2.4%. However, continued population growth could tighten conditions unless first-homebuyer activity eases rental demand.

On the lending side, activity from investors and first-home buyers is increasing, bolstered by lower interest rates and the expanded First Home Guarantee Scheme (FHGS), which now offers unlimited places and higher property price caps.

What’s Next for Melbourne?

Melbourne’s housing market recovery is evolving into a more durable resurgence. With population growth returning, auction activity strong, and supply tightening, further price growth into 2026 appears likely.

Monitoring upcoming population and housing data, as well as first-homebuyer uptake, will be key to understanding how momentum continues into the new year.

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