Melbourne’s housing market is on the verge of becoming one of the least expensive among Australia’s capital cities, but it remains vulnerable to potential losses driven by expected interest rate increases.
Due to the impact of COVID-19 lockdown policies and measures implemented in the state of Victoria, property experts believe the city has become an attractive destination for first-home buyers. Data from PropTrack shows that Melbourne home prices declined in 2024 to fall below those in Perth and Adelaide, although they remain slightly higher than in some other cities.
This decline is largely attributed to the higher proportion of apartments compared to detached houses. With a slight stabilization recorded in February, the median house price in Melbourne reached $1.012 million, close to Adelaide’s median of $1.01 million. Expected price growth in Adelaide could soon push Melbourne into a more affordable ranking within days.
As a result, only Darwin and Hobart remain more affordable, further reinforcing Melbourne’s decline in position among the most expensive capitals. Historically, the city was the second most expensive capital until mid-2024.
With the number of homes listed for sale continuing to rise, Melbourne’s market recovery appears fragile. Craig confirmed that any new increase in interest rates could have a more pronounced impact on Melbourne, although it remains more affordable compared to several other capitals.
Meanwhile, Jacob Caine, President of the Real Estate Institute of Australia, noted that despite current challenges, Melbourne continues to hold an excellent standing thanks to its cultural facilities, diverse dining offerings, and well-developed transport infrastructure.
