Living Stonnington: Woodards South Yarra

Melbourne Property Market

An Optimistic Outlook for 2025

With another much needed rates cut in the rear view mirror (with the hopes of more to come), median house prices on an upward trajectory, and an optimistic sentiment that has swept across the entire city, the Melbourne property market is as buoyant as it has been since reaching record heights in 2022.

Melbourne outperforming the rest of Australia

Melbourne’s median property prices have been slowly but surely increasing in 2025, which is a welcome change from the drops over the previous three years. According to Cotality (formerly CoreLogic), Melbourne’s median dwelling price in the month of May rose by 0.4% to $791,303, which was the biggest rise by any capital city in Australia (and the largest monthly jump since 2021). Melbourne has had a median price increase for every month in 2025 (up to the end of May 2025).

There are some suburbs across Melbourne which have exceeded expectations. Hampton East is one of the genuine booming suburbs with a median house price rise of 6% in the 3 month period to the end of May. Parts of the west including Albion (5.2%) and Keilor Downs (5.1%) further triumphed with standout results in the same period, while in the outer east, Knoxfield (5.2%) and Lysterfield (4.9%) were also high achievers.

“There’s no more buyer’s market, it has swung back in favour of vendors,” said Matthew Scafidi to the Herald Sun, Real Estate Buyers’ Agents Association of Australia Victorian representative. “Melbourne is back in a big way.”

A 2nd RBA rates cut with more predicted in 2025

In May, the Reserve Bank of Australia cut rates for the second time this year, dropping the cash rate by 0.25%

to 3.85%. This was the first time the cash rate has been under 4% in exactly two years (since May 2023).

“I know this period of relatively high interest rates has been, and continues to be, challenging for many households and businesses,” “But it was essential we brought inflation down because inflation hurts everyone.”

- Michele Bullock, Governor of the Reserve Bank of Australia

While two rates cut this year is welcome relief to all Melburnians who have a mortgage of any size, experts are predicting that is not the end of cuts for the year. Many of the big banks are forecasting multiple rates cuts before the start of 2026. National Australian Bank (NAB) have predicted cuts in July, August, and November which would take the cash rate to 3.1%. Meanwhile, the brains trust at Westpac believe we’ll see two more cuts this year, as well as two cuts in early 2026 to take the cash rate to 2.85% by May 2026.

Early soaring winter clearance rates a sign of things to come?

The nippy weather and drizzly outlook is often the reason many Melburnians prioritise staying in their toasty home to watch the footy rather than venturing out to go house hunting. But early auction clearance rates numbers for winter 2025 are showing that this year, that trend could very well be turned on its head.

In the second full week of June (for auctions across the weekend June 14th and June 15th), clearance rates hit a

high of 74% across 503 properties under the hammer. For comparison, the same weekend in 2024 saw a clearance rate of 59%. Domain also reporter an auction clearance rate of 75% for results in the week June 22nd to June 28th.

“We’ve been saying within the sector for a little while now that there are early signs of renewed momentum — and this clearance rate is tangible proof that it’s beginning to take hold,” said REIV interim President Jacob Caine to the Herald Sun. “There’s definitely a shift in energy. That 74 per cent result speaks to a level of confidence we haven’t seen in some time.”

The week ending June 1 also saw 1,547 properties go to auction in Melbourne, the highest volume of the year thus far indicating sentiment is high.

A long-term play for Melbourne’s inner city

One of the best performing areas across Melbourne over the previous five years has been the inner suburbs surrounding the city. And as the market in Melbourne looks to rebound in 2025 and beyond, these inner city suburbs are predicted to continue to thrive.

Domain recently listed Melbourne’s inner-city MVPs, with Brunswick East topping the list. Located only 2.5kms from the CBD, this vibrant pocket (which has easy access to an abundance of trendy restaurants and scenic parklands), has seen median house prices rise to $1,300,000 and a 30.7% growth over the last 5 years. Alphington (25.1%), Hawthorn East (22.6%), Northcote (19,3%), and Hawthorn (18.3%) round out the top 5.

The beauty of these inner-city suburbs is just how diverse and convenient they are. Each of these suburbs delivers a range of houses, townhouses, units, and apartments to buy, catering for young and growing families, busy professionals, downsizers, first time buyers, and even those looking to get into the investing game.