Buyer demand for Melbourne property rising, investor appeal strengthening

Investors fed up with being over regulated and overtaxed spent much of 2023 and 2024 exiting the Melbourne market.

Property prices dropped during the exodus while elsewhere, particularly in the smaller capital cities, prices soared.

Suddenly the Melbourne market was cheaper than Brisbane and Sydney, and on a similar level to Adelaide and Perth. The median dwelling value in Melbourne is now $803,194, up 1.4 per cent over the year and 1.0 per cent over the past quarter.

The market has now caught on that Melbourne once again represents good value and it is well and truly in revival mode, with demand re-accelerating.

Owner-occupiers and investors are once again starting to take advantage of the value offered by the Melbourne market compared to other cities.

Despite the recent downturn, Hotspotting was always confident the Melbourne market would come back.

It still has all the fundamentals in place for future property price growth, including relative affordability, high population growth, largely through overseas migrants, and a big program of infrastructure developments that are generating economic activity and employment.

Buyer demand is beginning to rise. Our analysis shows the total number of quarterly sales in Greater Melbourne in the June quarter was at the highest level it has been since the peak of the Covid boom in December 2021.

Part of what is helping drive the Melbourne market now is the strength of its unit market. Unit sales in the Greater Melbourne region are just slightly below the 2021 peak.

Within the Melbourne LGA there were 5,067 units sales in the 12 months to September 2025, according to PropTrack figures, with the City of Melbourne leading the way with 1,859 unit sales – the highest level in Australia - and well above the other perennially strong unit market, Surfers Paradise, which recorded 1,292 sales during the same period.

Melbourne City remains an affordable unit market, with its median unit price of just $430,000 in September 2025 below that of Brisbane ($685,000) and Sydney ($945,000), Perth ($520,500), Adelaide ($536,500) and Hobart ($895,000).

The market share of unit sales across Greater Melbourne has risen from 34 per cent of total sales six months ago to 35 per cent three months ago and 37 per cent now.

The Melbourne rental market, together with Canberra and Sydney, is recording the softest rental conditions, with annual rents rising by the least amount of any capital city over the past 12 months, however, the trend looks to be picking up in these cities. Gross dwelling rental yield in the Victorian capital is 3.7 per cent.

At 3.0 per cent below its March 2022 peak, there are plenty of opportunities to buy well in Melbourne ahead of the growth – you just need to remember that Victoria has the highest property taxes in Australia and a government with an apparent eagerness to keep introducing new ones.