M:
The Big Picture
Melbourne Prestige Residential Spring/25
The Economy Key Drivers
Prestige Residential Sales Update
Prestige Sales
Prestige residential sale transactions above $3 million tallied to 283 in Q2 2025 across Melbourne, moving upwards by 78% from the previous quarter This was influenced by a lower number of new and total listings, whilst the market anticipated a further reduction in interest rates. Over the past year to Q2 2025, the total number of prestige sales was 55% lower, reaching 1,007 sales. As a benchmark, over the past five years, the annual average was 1,292 sales
Super-Prestige Sales
The share of super-prestige sales (above $5 million) was recorded at 23%, compared to the total number of prestige sales (above $3 million) across Melbourne in the year ending Q2 2025. This was lower than one year ago when the proportion was 25%, but remains above the 19% share recorded five years ago Over the past year to Q2 2025, Melbourne’s super-prestige sales volume has fallen by 59%, but grown over the past five years by 129%
Total Number of Prestige Sales ($3m+)
Share of Super-Prestige Sales ($5m+), by Number
Melbourne Prestige
Prestige Residential Sales Update
Duration +9 days
Prestige homes across Melbourne took an average 83 days on market - from the time they were listed to the day they went under contract - in the year ending Q2 2025 This duration was 79 days a quarter ago (+4 days) and 74 days a year ago (+9 days) A lower number of days on market tends to mean homes are selling fast with more desirable properties, while a higher number of days suggests a slower market with above market values. Looking back, the fiveyear average has taken 81 days to sell a home
Average Days on the Market
Newly advertised property listings in Melbourne were 12 2% lower in the month of June 2025 than the equivalent period last year, according to Cotality This trended below the Australian average of -11.7% and below the -12.9% across Australian capital cities
Melbourne’s total number of listings in the month of June 2025 were 10.0% below the equivalent period last year, according to Cotality By comparison, the Australian average for total listings was -5.8% and across Australian capital cities was -4 4%
Melbourne prestige property prices fell by 2 1% in the year ending Q2 2025, with a fall of 0 1% recorded in the last quarter Looking back at price growth since Q2 2020, prestige apartments (13 1%) outpaced prestige houses (12 3%) over the five years. In Q2 2025, prestige apartment prices were 2 6% higher and were 3 7% above the previous year In the same quarter, prestige house prices fell by 2.3% after declining 6 6% in the past year Annual residential price growth has averaged 2 5% over the past five years
Looking ahead, McGrath Research anticipates Melbourne prestige residential prices by the end of 2025 to remain similar to 2024, followed by a stronger 3% rise in 2026. Factors taken into consideration include the forecast of a stronger economy, a solid performing stock market and the reduction of interest rates encouraging buyer confidence to return
Forecast for Prestige Prices
Prestige Residential Rents Update
Prestige Prestige Yield +18 bps
Change in Gross Rental Yield
Residential gross rental yields rose 5 bps in the Q2 2025 quarter to be 3 60% across the Melbourne prestige market, while being 18 bps more than a year ago Gross rental yields are a good initial measure of comparing the return of a property investment before expenses are deducted Gross rental yields have averaged 3.09% over the past five years.
Melbourne residential rental vacancy was recorded at 1 3% in Q2 2025, rising 10 bps in the quarter to total a 10 bps rise over the past year according to APM Generally, around 3% vacancy is considered a balanced market between rental supply and demand. Below this equilibrium is considered to be an undersupplied pool of rental homes Over the past five years, rental vacancy has averaged 1.7% per year.
Change in Residential Rental Vacancy
Change from a year ago
Prestige Residential Rents Update
Melbourne prestige property rents rose by 3.4% in the year ending Q2 2025, with a rise of 2 0% recorded in the last quarter Looking back at rental growth over the five years since Q2 2020, prestige houses (41 8%) outpaced prestige apartments (37 3%) Prestige house rents in Q2 2025 were 2.1% above a quarter ago, but were 0.4% lower over the year In the same quarter, prestige apartment rents rose by 1.9% after rising 8.1% in the past year. On average, over the past five years, prestige rents grew 7 2% per year
A considerable number of new prestige homes have been built in Melbourne in recent years but only a modest share of these homes have been made available in the rental pool As a result, McGrath Research forecast less upward pressure on rents to be 4% at the end of 2025, with a further 3% rental growth likely in 2026
Change in Prestige Rents
Forecast for Prestige Rents
Definitions
Prestige Property
The most desirable and most expensive property in a given location, generally defined as the top 5% of each market, by value.
Prestige Sales
Melbourne prestige sale transactions hold a threshold of A$3 million
Super-Prestige Sales
Melbourne super-prestige sale transactions hold a threshold of A$5 million.
Wealthy Population
A high-net-worth individual (HNWI) with a net worth of at least US$10 million.
Guiding you home
Michelle Ciesielski Head of Research, McGrath Research
michelleciesielski@mcgrath com au
+61 414 694 220
www mcgrath com au