Melbourne property market shows signs of recovery with fourth month of price growth

Melbourne’s property market is showing consistent signs of recovery after recording its fourth consecutive month of price growth, according to the latest PropTrack Home Price Index.

The Victorian capital’s typical house value has increased by $9000 (1 per cent) since January to reach $900,000, while unit prices have risen by nearly $12,000 (2.1 per cent) to $588,000.

Despite these gains, property values remain below their levels from a year ago, with houses down from $917,000 and units below the previous mark of $594,000.

Anne Flaherty, senior economist at PropTrack, described the consistent growth pattern as significant for the Melbourne market.

“For a long time we have been trying to figure out when Melbourne will start its comeback and the fact that we have seen home values increase every month this year, that’s a really good sign that we are starting to see that recovery,” Flaherty said.

The growth has helped Melbourne maintain its position ahead of Perth, with the Western Australian capital’s median dwelling price now just $2000 behind Melbourne’s.

Melbourne currently ranks behind Sydney, Brisbane, Canberra and Adelaide in terms of median dwelling values, making it one of Australia’s more affordable major cities, though this is partly due to its higher proportion of units compared to other capitals.

Property values in Melbourne remain below their 2022 peak, with houses still 4.2 per cent below their highest point and units 3.6 per cent below peak values.

This represents an improvement from December 2024, when houses were 5.1 per cent below peak and units were 5.6 per cent off their record levels.

“Units are definitely seeing the best recovery,” Flaherty said.

She attributed this trend to the relative affordability of units and the fact that many are selling for less than current construction costs would allow, suggesting continued growth potential in this segment.

Real estate agents have reported increased market activity, particularly in the more affordable price brackets.

Mark Lynch, Barry Plant head of growth, confirmed the company was “certainly seeing signs of a recovery in the market.”

He identified homes priced under $1 million as particularly in demand, with areas such as Noble Park and Keysborough showing strong activity.

Lynch noted that first-home buyers were emerging as a significant driver of sales, alongside increased interest from Sydney-based investors operating through buyer’s advocates.

“That first-home buyer market is looking very strong at the moment,” Lynch said.

“They are at the point where they are saying, it’s not going down and that now is the time to dig in and have a really good look.”

According to Lynch, units are proving especially popular among first-home buyers who are committing to purchases that fit within their budget constraints.

If current trends continue, PropTrack expects Melbourne to return to annual growth before the end of 2025, though a complete recovery to peak 2022 values is not anticipated until next year.