Property Market Melbourne: Expert Insight and Analysis

September 25, 2021

Melbourne has a thriving housing market. Ranked 8th on the World Liveability Index, the city is home to beautiful landscapes, rich culture and unique biodiversity. The Melbourne metropolitan area offers a wide range of options for both real estate owner-occupiers and investors. Let’s take a closer look at Melbourne's property market.

Melbourne Property Market Trends

Melbourne metropolitan area statistics by the Real Estate Institute of Victoria (REIV) show that:
  • House prices sold at a median house value of $1.01million
  • Median rentals averaged $480
  • Rental property yields were 2.6%
  • Houses took an average of 34 days to sell
Melbourne Metropolitan Average House Prices
Number of Bedrooms Price ($)
2 Bedrooms 980,000
3 Bedrooms 846,000
4 Bedrooms 1,040,000
The real estate market in Melbourne has steadily increased in value over the years. House prices were valued at $9,400 in 1966!

Melbourne Property Prices Historical Values

Year Value ($)
1966 9,400
1970 12,834
1980 39,675
1986 82,573
2000 199,282
2012 481,117
2018 719,929
2020 875,980
2021 1,010,000
Even accounting for the inflation rate, property returns have proved to be consistently high. SQM Research data reveals that asking prices have also followed a general upward trend as confidence in the sector increases. The city’s population is growing in leaps and bounds. McCrindle Research figures that by 2050, Melbourne will overtake Sydney as Australia’s biggest capital. Forecasts show that the city’s current five million-odd population will grow to eight million in the next 30 years. National Australia Bank forecasts predict that Melbourne property values and housing prices will go up by 17.6% up to the end of 2021 and a further 3.5% in 2022. These shifting population trends and optimistic forecasts mean:
  • Investors can make substantial returns in the real estate market
  • Homeowners can grow real equity

Well-Performing Property Types In Melbourne’s Housing Market

Considering how much the population is expected to grow in the coming years, housing affordability will decline. The high expected prices are all the more reason why strategic, tailored financial planning, which involves buying the best real estate now, is essential. Here’s some strategic property advice on what to buy so you can position yourself for an investment that cushions your future.

Inner Melbourne Housing Market Townhouses

Townhouses are medium-density homes that accommodate more families than stand-alone houses. These dwellings are usually multiple-story buildings that are often terraced and, at times, semi-detached. The appeal of townhouses comes from their more efficient utilisation of land, especially in capital cities. They are relatively cheaper, which is a draw factor for first home buyers. While they may not have much in the way of backyards, they appeal to the younger demographic. They have the potential for higher price growth as the population increases in the inner Melbourne housing markets.

Melbourne Housing Market Units

Units are small stand-alone dwellings that usually have a small backyard. They are typically built side by side (not high rise). These homes are set to continue being popular with young couples and small families, keeping their unit values and property prices strong.

Low-Rise Apartments

Research by Charter Keck Cramer estimates that close to 14,000 apartments went up in the Melbourne metropolitan area in 2020. In 2021, 10,400 apartments began construction. However, only 5,400 lower-rise apartments were launched or approved. These statistics point to the diminished appetites among buyers for high-rise Melbourne CBD towers. Buyers have tended towards lower-rise apartments suited for families leading to excess housing supply in tall apartments. That’s why low-rise apartments are more likely to experience capital gains appreciation.

Melbourne Houses

Freestanding homes remain viable investment property options that continue to experience price growth due to factors like:
  • Aesthetic beauty
  • Their functionality
  • Land value
  • The sentimental value of owning a house for first home buyers

Where to Buy Property In Melbourne

There are bargains to be found all over the Melbourne metropolitan area, we’ve broken it down into areas for you.

South Eastern Suburbs

The city’s south eastern side is made up of mostly freestanding homes and units, and tends to attract families looking to build communities. The most important considerations to make before making a property investment in these areas are:
  • The strength of amenities
  • Safety of the neighbourhood
Unsafe neighbourhoods with unfavourable liveability factors have lower prices and tend to gain the least value.

CBD and Immediate Inner-City Region

The central part of Melbourne has a substantial population of close to 30,000 people. It’s also the hub of developments, especially in the apartments and townhouse arena. The CBD and inner-city areas often experience higher value rises and are usually the most expensive areas to buy. These central areas offer a promising investment opportunity, especially as population growth increases.

Eastern Suburbs

On the east side of Melbourne, in areas like Glen Waverley, Ringwood or Lilydale, property values tend to be based on the affluence factor. The eastern side of the city attracts higher net worth individuals who earn over $1,000 per week. When buying on the east side, focus on details like spaciousness and the aesthetic appeal of the surroundings. The lower the affluence factor of the area, the lower the property values.

Western Suburbs

The western side is a predominantly blue-collar area. To choose a property in these places, consider factors such as transport, connectivity or schools. Examples of worthwhile locations for a home or investment on the western side are Sunbury, Melton or Werribee because:
  • They are close and well connected to the CBD
  • Prices are affordable
  • They have steady and growing populations for rental income
  • Property growth rates are about 9%

Buying Property In Melbourne

When choosing a property in the Melbourne area, bear in mind the generally high standards expected in the area. Steer away from substandard dwellings as they are likely to lose you money in the long run. Areas closer to the CBD tend to appreciate faster, giving higher capital gains and rental income than areas further away. It helps to determine the intrinsic value before you buy. If a house is priced lower than intrinsic value, you stand to gain. However, if the price is higher than the intrinsic valuation, it will depreciate. You should also do your research on an area’s income levels, safety, and appeal before you buy. With all these considerations, it’s plain to see that buying real estate under pressure can cost you. You won’t have the time to do your calculations or research adequately. Let Listing Loop help you to find the best property—minus the pressure. We specialise in off-market listings, giving you access to houses and units before they get into the public eye. That way, you have more time to ponder your decision before you have to worry about other buyers putting higher bids. But on the flip side, it's best to get in quick and enquire before someone else snaps the property up. The difference between on and off-market listings is that the latter is exclusively available to a select range of buyers—like yourself—making the purchase process smoother, faster, and less competitive. The process is simple:
  • Register on Listing Loop or download the app
  • Input your specifications for the house you are looking for
  • Receive a notification when you get a match
  • If the property ticks all the right boxes, your journey in the Melbourne real estate market begins.
Register on Listing Loop today for free for the simplest way to find the best off-market properties in Melbourne.

Photo by Alexis / CC BY


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