As we step into 2025, Melbourne’s real estate market presents a mix of opportunities and challenges. With insights from CoreLogic’s January Home Value Index (HVI), we can provide a comprehensive outlook on the trends shaping Melbourne’s property landscape. Here’s what buyers and investors need to know.
A Cooling Market Offers Opportunities
CoreLogic reports a -0.1% decline in Australian home values in December 2024—the first monthly drop in nearly two years. While this slight decline may signal a cooling market, it also presents opportunities for buyers in Melbourne, where home values fell -3.0% in 2024.
For buyers, this correction could mean greater negotiation power and a chance to secure properties at fairer prices, especially in a city where competition has been fierce in previous years.
Annual Performance and Capital Comparisons
Despite the recent decline, Australian home values rose 4.9% in 2024, adding approximately $38,000 to the median home value. However, Melbourne underperformed compared to mid-sized capitals like Perth (19.1% increase), Adelaide (13.1%), and Brisbane (11.2%).
Melbourne’s -3.0% drop in 2024 reflects a recalibration after years of rapid growth, making it an appealing market for long-term investors looking to capitalise on more affordable entry points.
The Resilience of Regional Markets
Regional areas outperformed the capitals in 2024, with a 6.0% annual increase in housing values compared to the combined capital index rise of 4.5%. This trend highlights the continued appeal of regional living, driven by lifestyle changes and affordability. However, for Melbourne buyers, this could mean exploring suburban areas with a balance of accessibility and affordability to compete with regional growth.
Rising Rental Yields
CoreLogic notes a modest 4.8% increase in national rental values over 2024, but Melbourne’s rental market is poised for stronger growth due to supply shortages and consistent migration. This creates a prime opportunity for investors, particularly in suburbs with high tenant demand and limited rental stock.
A Balanced Market with Increased Stock Levels
At Abode Advocacy Group, we’ve noticed more properties entering the Melbourne market, partly due to investors exiting during 2024. This increased stock creates a more balanced environment for buyers, providing better choice and reducing the urgency to make rushed decisions.
Shifting Buyer Preferences
Melbourne buyers continue to prioritise properties with flexible layouts for hybrid work, proximity to green spaces, and access to amenities like schools and public transport. With an evolving demand for larger homes in the suburbs, buyers should look for locations that balance lifestyle needs with long-term capital growth potential.
Understanding Material Facts
Navigating Material Facts—such as building defects, zoning changes, or future developments—remains critical for buyers in 2025. At Abode Advocacy Group, our job is to uncover these details and help clients make informed decisions.
Key Takeaways for 2025
The Melbourne market may have softened, but this presents a strategic opportunity for buyers to enter or expand their portfolios. With careful planning and expert guidance, buyers can leverage the current conditions to secure properties at competitive prices and benefit from future capital growth.
At Abode Advocacy Group, we stay ahead of the market by analyzing trends and data, such as those provided by CoreLogic, to ensure our clients make informed decisions. Whether you’re a first-home buyer, upsizer, downsizer or an experienced investor, 2025 could be the year to achieve your property goals.
Let’s make it happen—contact Abode Advocacy Group today to start your property journey.
