Melbourne’s residential property market hit its peak in Q4 2021, with the median price reaching $1.125 million after a sharp 36% rise over two years. Many expected a soft landing. Instead, the market corrected quickly.

To rein in inflation, the RBA hiked the cash rate to 4.35%. Over the following two years, residential prices dropped by 19.1%, wiping out much of the earlier growth.

A Glimmer of Stability in Early 2024

By early 2024, sentiment started to shift. Buyers believed rates had peaked, and Victoria’s strong population growth helped sustain demand. House prices rose slightly—up 1.6% in the first part of the year.

But the upswing was short-lived. Cost-of-living pressures and inflation uncertainty weighed on confidence. By the end of 2024, Melbourne’s median house price had slipped below $900,000—the lowest level in over four years.

Early 2025: A Positive Shift

February’s rate cut marked a turning point. In Q1 2025, Melbourne’s median house price lifted to $922,500; up 2.7% quarterly and the first gain in a year. That brought prices roughly back in line with Q1 2024 levels.

Q1 2025 Snapshot

  • Houses: $922,500 (+2.7% QoQ, -0.3% YoY)
  • Units: $629,000 (+0.9% QoQ, -0.1% YoY)

Land Market Holds Its Ground

The greenfield land market tells a slightly different story. Median prices rose 4.2% over the past year, supported by a shift in buyer profiles—more upgraders and increased activity in the South East growth corridor.

However, the Q1 2025 median held steady at $400,000. No growth this quarter may suggest a price ceiling.

That said, widespread incentives remain. Some estates are still offering rebates and discounts of up to 10% off advertised prices. These reduce the upfront cost, but underlying land values remain historically elevated.

This article references findings from our April 2025 Economic and Residential Property Market Report. Read the full report here.