Australia’s Real Estate Market – Melbourne’s housing market is once again making headlines in 2025 as home prices continue to soar amid growing demand, limited supply, and strong investor interest. With buyers flocking to both inner-city and suburban locations, Australia’s real estate sector shows no signs of slowing down.
This article provides a comprehensive look at the current trends, price charts, key factors, government insights, and what buyers, sellers, and investors need to know in 2025.
Australia’s Real Estate Market Overview 2025
The Melbourne housing market has recorded a sharp rebound in 2025. According to data released by property analytics firms, average home prices have increased by over 6.8% in the first quarter of the year alone.
Key Highlights:
- Steady demand from local buyers and foreign investors
- Rising interest in suburbs like Werribee, Preston, and Point Cook
- Apartments in CBD regain popularity after slump
- First-time homebuyer activity has surged post-policy incentives
Why Are Melbourne Home Prices Rising in 2025?
There are several contributing factors behind the surge in home prices across Melbourne:
- Interest rate cuts by the Reserve Bank of Australia (RBA)
- Return of overseas migration post-COVID recovery
- Job growth in major sectors like tech, healthcare, and finance
- Government grants for first-home buyers
- Tight supply and low construction starts in key zones
Top Suburbs with Highest Growth
| Suburb | Q1 2025 Growth (%) | Median Price (AUD) | 2024 Price (AUD) | Difference (AUD) |
|---|---|---|---|---|
| Preston | 10.2% | $1,025,000 | $930,000 | +$95,000 |
| Werribee | 9.8% | $720,000 | $655,000 | +$65,000 |
| Point Cook | 8.5% | $810,000 | $747,000 | +$63,000 |
| Brunswick | 7.3% | $1,230,000 | $1,147,000 | +$83,000 |
| Glen Waverley | 6.9% | $1,480,000 | $1,384,000 | +$96,000 |
| Sunshine West | 6.3% | $690,000 | $649,000 | +$41,000 |
| Essendon | 5.8% | $1,350,000 | $1,275,000 | +$75,000 |
| Doncaster | 5.4% | $1,420,000 | $1,347,000 | +$73,000 |
Investor Activity Back on the Rise
- Rental yields remain strong, especially in units and dual occupancy homes.
- Foreign investment demand has returned, especially from China and India.
- Investors are also eyeing suburbs near future infrastructure projects like rail upgrades.
Government Schemes Fueling Demand
First Home Owner Grant (FHOG)
- Up to $10,000 available for eligible buyers
- Valid on new builds valued below $750,000
- Apply via Victoria State Revenue Office
Home Guarantee Scheme
- Buy with as little as 5% deposit
- Supported by NHFIC (National Housing Finance and Investment Corporation)
- Learn more at nhfic.gov.au
New Infrastructure Projects in 2025 Driving Property Growth
| Project Name | Completion Year | Suburbs Affected | Impact on Prices |
|---|---|---|---|
| Suburban Rail Loop East | 2029 | Box Hill, Clayton, Glen Waverley | High |
| North East Link | 2028 | Bulleen, Watsonia | Medium |
| Melbourne Metro Tunnel | 2025 | CBD, Parkville, Domain | High |
| Level Crossing Removals | 2026 | Sunbury, Pakenham | Medium |
Affordability & Challenges for Buyers in 2025
Key Issues Faced by First-Time Buyers
- Limited stock below $700,000
- Competitive bidding and quick sales
- Interest rate volatility risk in coming years
Tips for New Buyers
- Get pre-approval to stay competitive
- Explore government schemes
- Consider outer suburbs or townhouses
Average Home Loan Size in VIC (2025)
| Buyer Type | Average Loan Amount (AUD) | Interest Rate (avg) | Monthly Repayment (approx.) |
|---|---|---|---|
| First Home Buyer | $580,000 | 5.4% | $3,217 |
| Investor | $650,000 | 5.8% | $3,860 |
| Owner Occupier (existing) | $720,000 | 5.1% | $3,961 |
FAQs – Australia’s Real Estate Market
Q1: Is 2025 a good time to buy property in Melbourne?
A: Yes, despite rising prices, several government schemes, strong job growth, and low vacancy rates make it a good long-term investment.
Q2: Which areas are still affordable for first-time buyers?
A: Suburbs like Craigieburn, Tarneit, and Melton remain under $700,000 median and are rapidly developing.
Q3: What’s the expected growth for 2025 in Melbourne’s housing market?
A: Analysts project an annual increase of 8% to 10% across many regions, particularly in growth corridors.
Q4: Are interest rates expected to go up or down?
A: As of May 2025, the RBA has hinted at a neutral stance, but any global economic shocks could change that.
Q5: Can foreigners still buy property in Australia in 2025?
A: Yes, but approval from FIRB (Foreign Investment Review Board) is required. Learn more at firb.gov.au
Where to Get Help & Contact Departments
- State Revenue Office (Victoria):
Website: sro.vic.gov.au
Phone: 13 21 61 - National Housing Finance Corporation (NHFIC):
Website: nhfic.gov.au
Contact Form: nhfic.gov.au/contact-us - Foreign Investment Review Board (FIRB):
Website: firb.gov.au
Phone: +61 2 6263 3795 - Consumer Affairs Victoria:
Website: consumer.vic.gov.au
Helpline: 1300 55 81 81
Conclusion of Australia’s Real Estate Market
Melbourne’s real estate market in 2025 is booming with strong price growth, rising investor confidence, and robust buyer activity across all segments. While affordability is a concern, new infrastructure and government support continue to fuel optimism in the sector. Whether you’re a first-time buyer or seasoned investor, understanding the market trends and accessing the right support will be key to navigating the year ahead.
How are other major cities in Australia affected by the real estate boom?
Sydney and Brisbane are also experiencing significant increases in home prices.
