Melbourne Property Market 2025: Spring Is Back, and Everyone Wants a Piece

There’s a distinctly electric hum in Melbourne’s property scene right now. After a few quieter years, things are heating up again — and not just because of the warmer weather. Buyers, investors, and first-timers are all jostling for position, and the result is a market that’s simultaneously optimistic, frenetic, and supply-starved.
 
In this post, let’s dive into what’s driving the Melbourne property market — from the influx of interstate investors, to first homebuyer fervour, tight stock, and the potential for 2026.
 

Interstate Investors: Melbourne Looks Like Value (Again)

 
One of the most interesting shifts this year has been the renewed appetite among interstate investors for Victorian properties. Why? Simply put: relative affordability, growth potential, and a Victorian economy that’s firing on multiple cylinders.
 
Melbourne still sits at a price discount compared to Sydney in many segments, which makes it more attractive for buyers relocating or expanding their portfolios. Land Sales+2RealEstate+2 Add to that a rebound in migration and the return of confidence post-pandemic, and the city is drawing attention as a longer-term capital growth play. RealEstate+2houseSEEKER+2
 
But it’s not just about finance. Many interstate buyers bring fresh perspectives: they’re not tied to local emotional attachments, so they’ll chase value, yield, and upside more aggressively. That helps push up competition — especially in locations that offer both affordability and infrastructure access. Local agents routinely flag that some of their strongest buyer enquiries now stem from New South Wales and Queensland. RealEstate+2Land Sales+2
 

First Homebuyers: The Wild Card Creating Intensity

 
If interstate investors are zooming in, first homebuyers are pulling the market in all directions. Thanks to generous government incentives, low deposit schemes, and favourable stamp duty concessions, many first-timers are diving in with more confidence — and urgency. State Revenue Office+3Pearson Chambers+3Aussie Home Loans+3
 
In Victoria, the First Home Owner Grant (FHOG) offers $10,000 toward buying or building a new home. State Revenue Office+2Quantum Buyers Agents+2 Meanwhile, stamp duty relief is a major carrot: first home buyers can score full exemption up to $600,000, and sliding concessions from $600,001 up to $750,000. Aussie Home Loans+3Bank of Melbourne+3Quantum Buyers Agents+3
 
Add to that newly introduced or expanded low-deposit mortgage schemes (such as guarantees that reduce or eliminate lenders mortgage insurance), and suddenly, the barrier to entry isn’t quite so insurmountable. houseSEEKER+3Homebuyers Centre+3Quantum Buyers Agents+3
 
So what’s the effect? First homebuyers often compete fiercely in the lower to middle price bands, bidding on units, townhouses, and modest homes in suburban pockets. This competition pushes up prices and can squeeze out more cautious buyers — especially when stock is limited (more on that soon).
 

Supply Crunch: The Invisible Pressure Cooker

 
If there’s a villain in the current story, it’s lack of quality stock. Simply put, too many buyers chasing too few homes is a recipe for upward pressure on pricing.
 
Melbourne has been grappling with low new listings, planning and construction delays, and constrained approvals. RealEstate+3Land Sales+3Aussie Home Loans+3 For example, in 2025 new listing volumes were down compared to the same period in 2024, exacerbating already tight supply dynamics. Land Sales+1 That shortage is felt across suburbs: once “hidden gems” get snapped up quickly, leaving fewer fallback options.
 
Where supply is better, it often comes with trade-offs — older stock, less ideal locations, smaller lots, or greater renovation needs. Buyers are making concessions, but that too pushes some suburbs to change rapidly in character.
 
This confluence — strong demand meets weak supply — is at the heart of the current market tension. Sellers are in a happy spot (if they time things well), but for buyers it’s a delicate dance of strength, speed, and compromise.  Many buyers are making pre auction offers to maximise their chance of success by limiting time on the market and therefore competition, so buyers need to be ready to pounce.
 

The Return of the Spring Market (And Will It Last?)

 
Welcome back, spring market! After a couple of sluggish springs, 2025 has delivered a strong seasonal rebound in Melbourne. Auction volumes are rising, buyer engagement is vivid, and agents are reporting often multiple inspections and bidding wars — the kind of buzz that used to feel “normal” before the rate hikes and pandemic disruptions. RealEstate+3Land Sales+3RealEstate+3
 
Prices are responding — in mid-2025, Melbourne property values have been broadly positive, reversing some of the 2024 softness. Land Sales+2OpenAgent+2 One forecast even suggests Melbourne house prices could rise by up to $55,000 (around 6 %) in the next year as buyers catch up. RealEstate
 
But will the momentum carry into 2026? My take: yes — with caveats.
  • Interest rate cuts are likely to be the fuel. Many economists expect more rate relief from the RBA, which would increase borrowing capacity and buyer confidence. houseSEEKER+3Land Sales+3KPMG+3
  • Sticky supply constraints will continue to underpin value — until enough stock enters the market, upward pressure won’t easily dissipate.
  • However, macro risks (inflation, global volatility) or a slower wage growth environment might temper exuberance.
Given those factors, I see 2026 as an extension of growth — not explosive, but steady — particularly in suburbs that tick infrastructure, amenity, and accessibility boxes.
 

Interest Rate Cuts: The Gravity That Draws Buyers Back

 
It would be remiss not to highlight interest rates — the gravitational force behind so many property market moves. Melbourne’s bounce in 2025 owes a lot to recent RBA decisions and market expectations of further easing. Land Sales+2RealEstate+2
 
Lower interest rates mean:
  • More borrowing power — buyers can stretch further.
  • Lower repayments for existing borrowers, which gives sellers confidence to transact.
  • Greater incentive for investors, who see improved yield profiles.
  • A psychological boost— when rates come down, sentiment shifts from caution to “get in now before rates rise again” FOMO.
So while supply and demand dynamics are doing much of the heavy lifting, interest rate cuts are the wind behind the sails.
 

Final Word: Optimism With Eyes Open

 
Melbourne’s property market in 2025 is a fascinating blend of resurgence, bottlenecks, and fresh capital injection. Interstate investors are spotting value, first homebuyers are throwing themselves into the fray, and tight inventory is turbocharging competition. Add in the return of the spring market and likely interest rate easing, and the stage is set for some exciting action heading into 2026.
 
That said, this isn’t a free-for-all. Buyers still need diligence: suburb fundamentals, quality of the product, and financing metrics will matter more than ever. The smart move in 2026 will be choosing where to ride the momentum — not just catching the wave.
 
To find out how the team at The Property Bureau can give you an edge when purchasing your property, reach out to Alastair Mairs on 0450109243 or Kristy Caskey on 0408166944. Their decades of experience is your secret weapon!
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Kristy Caskey

Kristy prides herself on making her clients feel welcome, understood and in safe hands from their very first meeting. With over 20 years' experience in the Melbourne property market it has taught her to ensure every ‘i’ is dotted and ‘t’ crossed and how imperative this is when transacting property.