In This Week’s How’s The Market | Edition 152
Melbourne’s property market has moved differently to the rest of Australia.
While Perth, Adelaide, and Brisbane saw rapid price growth, Melbourne remained relatively flat.
This underperformance raises a question. Could Melbourne be Australia’s most undervalued property market?
This week we explore why investors are looking at Melbourne again and which areas may be entering a growth phase.
A Quick Market Snapshot
Auction activity showed a quieter start to the year.
Last week, Melbourne recorded about 700 auctions due to the public holiday. Clearance rates were 41.5 percent according to SQM data.
This low figure is not fully reflective of the broader market because fewer auctions were held.
Typically, Melbourne clearance rates sit between 50 and 60 percent. Rates above 65 percent suggest a rising market, while below 50 percent can indicate weakness.
Over the past six months, the market has remained mostly steady. More meaningful signals are expected as auction volumes return to normal over the next 3 weekends.
Not One Market, But Many
Melbourne is not a single market. Different regions and price brackets perform differently.
Premium suburbs may remain flat. Affordable areas can see strong demand and price growth at the same time.
In 2025, affordable markets outperformed higher-end suburbs. Regional centres and lower-priced metro areas attracted strong competition from investors seeking value.
The Rise of Affordable Growth Areas
Two regions stood out: Bendigo and Frankston.
In Frankston, properties starting in the low $600,000s early last year rose into the $700,000 to $800,000 range just 12 – 14 months later. That is 15 to 20 percent growth.
Key drivers included:
- Interstate investors seeking affordability compared to Sydney and other cities
- Rising rents and low vacancy rates attracting investors
- Major infrastructure upgrades including a $1 billion hospital redevelopment, new commercial projects, and foreshore improvements
The Satellite City Strategy
Government planning also shapes future growth.
Victoria’s population reports highlight areas likely to become key satellite cities: Melton, Geelong, Bendigo, and Frankston.
Population growth is expected to spread to these areas, not just the inner city. Rezoning around transport hubs and activity centres is already supporting new housing and future price growth.
Why Investors Are Looking Again
Melbourne’s relative value is drawing attention.
Perth and Adelaide already surged over the past three to five years. Many investors are now questioning how much upside remains. Melbourne is different.
Property prices have been stagnant since 2021, but rents are rising.
This has pushed rental yields from around 3 percent to closer to 4 percent. Some apartments are achieving yields near 7 percent because prices have not moved much in a decade.
Migration patterns are also shifting. Many people who moved interstate during COVID are returning, often bringing extra buying power from sales in other states.
What The Agents Are Saying
Agents report interstate buyers are active in Melbourne’s affordable markets.
- Sydney buyers target homes much cheaper than their city equivalents
- Investors from Perth and Brisbane are exploring Melbourne after strong growth locally
- Demand is strongest in suburbs with about 4 percent yields and prices below thresholds such as the $950,000 first home buyer incentive
The Wow Factor!
11 Ottawa Road, Toorak, Vic 3142
Toorak English Manor Estate
Why it WOWs:
- Rebuilt English manor with timeless luxury
- Grand interiors with vaulted ceilings
- Marble kitchen with Gaggenau appliances
- Heated pool and landscaped garden terraces
- Luxurious bedroom suites with dressing rooms
- Wine cellar, gym and private study
- Blue-chip Toorak cul-de-sac near Toorak Village
Price guide : $17,500,000 – $19,250,000
Final Thoughts
Melbourne has not delivered strong recent growth, but this underperformance is attracting experienced investors.
Compared to booming markets, it still offers affordability, rising rental yields, and solid long-term fundamentals.
Affordable suburbs and emerging satellite cities are best positioned for growth.
For long-term buyers, current conditions may present an opportunity before the broader market moves again.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
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Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
