Melbourne, Australia’s most affordable big capital city in the property market
Melbourne’s property market is proving its resilience as the year kicks off. After hitting the lowest point in its growth cycle in January 2025, signs of recovery are already emerging. This rebound is supported by Melbourne’s strong economic fundamentals, while the city continues to offer the most affordable property prices compared to other major capitals like Sydney, Brisbane, Adelaide, and Perth.
Based on CoreLogic’s Hedonic Home Value Index, the housing downturn reversed in February, with Melbourne and Hobart leading the way. Both cities recorded the largest month-on-month increase in home values (+0.4%), marking a positive shift after a period of weaker performance. For Melbourne, this marks the end of a 10-month streak of declining prices, signaling a potential market turnaround.
Meanwhile, other capital cities and former growth leaders Brisbane, Perth, and Adelaide have now lost their leading position, allowing Melbourne and Hobart to take the lead in value growth.
According to CoreLogic, premium markets like Sydney and Melbourne have historically been the first to bounce back after interest rate cuts, suggesting a potential turnaround as economic conditions improve. While it’s still too early to measure the full impact of February’s rate cuts on the property market, one thing is clear—buyer confidence and sentiment are on the rise.
Despite this recent growth, Melbourne remains one of the most affordable capital cities in Australia, making it an attractive option for both investors and homebuyers. Compared to other major cities, Melbourne’s median property prices provide exceptional value, allowing buyers to enter the market without overstretching their budgets.
This affordability is supported by Victoria’s strong economic fundamentals including a rapidly growing population, which is projected to increase by 1.4 million people by 2036. The state has also established itself as a leader in job creation, generating over 880,000 new jobs in the past decade. Additionally, the Victorian government continues to invest heavily in major infrastructure projects such as the Suburban Rail Loop, Metro Tunnel, and road upgrades. These developments not only improve connectivity and livability but also drive long-term economic growth and housing demand.
For investors, this suggests a window of opportunity to secure properties at a lower price before demand picks up again. In Victoria’s case, home values have recently begun to recover after a prolonged decline, signaling a market turnaround.
Sources:
1. Hedonic Home Value Index by CoreLogic (March 2025)
https://www.corelogic.com.au/news-research/news/2025/housing-downturn-reverses-in-february
2. Invest Victoria website
https://www.invest.vic.gov.au/why-melbourne/growing-low-risk-transparent-economy
3. Victoria Department of Transport and Planning Website
https://www.planning.vic.gov.au/guides-and-resources/Data-spatial-and-insights/discover-and-access-planning-open-data/urban-development-program/victoria-in-future
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