2025 Melbourne Property Market vs the Rest of Australia

Every year someone declares that Melbourne is finished.

Too expensive. Too regulated. Too slow.

And every year Melbourne quietly keeps doing what it has always done.

It absorbs people, pressure and capital better than anywhere else in the country.

When you line up the Australian property markets heading into 2025, Melbourne stands apart.

Not because it surged the hardest, but because it already reset while other cities are only now testing their limits.

Melbourne underperformed and that is now its strength

Over the last growth cycle Melbourne lagged most capital cities.

While Perth, Brisbane and Adelaide recorded double digit annual growth at various points, Melbourne’s median house price growth remained largely flat across 2022, 2023 and much of 2024.

In several inner and middle ring suburbs, values were still below their 2021 peak heading into late 2024.

That places Melbourne in a different position entering 2025.

The city is not priced at euphoric levels, and its median house price remains well below Sydney despite Melbourne being Australia’s second largest city and economic hub.

This is what a reset looks like.

Population growth remains Melbourne’s quiet advantage

Victoria continues to lead the nation in net overseas migration, with Melbourne absorbing the majority of new arrivals.

Annual population growth has returned to pre pandemic levels, adding tens of thousands of new residents each year.

These arrivals do not enter the market as buyers.

They rent first.

They work, study, settle and then buy.

That pipeline is steady and relentless.

Few other cities have the same depth to absorb population growth without immediate volatility.

Rental pressure is now doing the work

Melbourne’s rental vacancy rate has tightened sharply.

Across many suburbs it now sits below 2 percent, a level widely recognised as indicating sustained rental pressure.

Median rents across Melbourne rose strongly through 2024 and into 2025, with increases in many areas running well ahead of inflation.

At the same time, housing supply is constrained.

Building approvals are lower than previous peaks.

Construction costs remain elevated.

New projects are being delayed or shelved.

This imbalance between demand and supply is measurable.

Historically, Melbourne property values respond to this pressure with a lag, not a spike.

How Melbourne compares to other capitals in 2025

Perth has delivered strong growth, but remains exposed to commodity cycles and interest rate sensitivity.

Brisbane has seen affordability deteriorate rapidly, limiting its next phase of growth.

Adelaide’s market has performed well but lacks the depth to absorb shocks easily.

Sydney remains expensive, with price to income ratios already stretched.

Melbourne sits in the middle.

Not cheap.

Not overheated.

Not fragile.

That position matters more than headlines suggest.

Melbourne rewards patience, not speed

Melbourne has never been a market for quick wins.

It rewards long term thinking and careful buying.

Historically, Melbourne’s strongest growth periods have followed extended flat phases, not boom years.

The data shows longer cycles, fewer extremes and greater resilience over time.

In 2025 Melbourne may not look exciting.

It looks durable.

Against everything else, Melbourne has already reset

While other capitals are now testing affordability ceilings, Melbourne is rebuilding from a flatter base.

That does not guarantee rapid growth.

It does reduce downside risk.

And risk matters more than noise.

If you are buying or selling in Melbourne in 2025, understanding where this market actually sits is critical.

This is a fundamentals driven city, not a hype driven one.

Victorian Property Settlements has been guiding buyers and sellers through Melbourne markets for over 25 years, across booms, corrections and resets.

If you are planning a move in 2025, make sure your decisions are based on where Melbourne truly is, not where the noise says it should be.

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.

Visit: www.victorianpropertysettlements.com.au