Melbourne’s residential property market peaked in Q4 2021 at $1.125 million, after a sharp 36% rise over just two years. Many expected a soft landing – a plateau, slower growth. That didn’t happen. 

To tackle inflation, the RBA lifted the cash rate to 4.35%. The result? A swift correction. Over the next two years, median residential prices dropped 19.1%, erasing much of the earlier gains. 

Stability Returns, Briefly 

By early 2024, there were signs the worst was over. Confidence grew that interest rates had peaked. Victoria’s strong population growth helped keep demand ticking over. House prices edged up 1.6% in the early months of the year. 

But the rebound didn’t hold. Cost-of-living pressures and persistent inflation concerns kept buyers cautious. Confidence slipped, and so did prices. By the end of 2024, Melbourne’s median house price had fallen below $900,000 – the lowest in over four years. 

Early 2025: A Positive Turn 

A February rate cut gave the market a shot of optimism. In Q1 2025, the median house price climbed to $922,500 – the first rise in 12 months. That figure brought prices roughly back to where they were in Q1 2024. 

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

What About Land? 

The greenfield land market told a different story. Median prices rose 4.2% over the past 12 months, driven largely by changing buyer profiles – more upgraders, and stronger activity in the South East growth corridor. 

That said, the median price held steady at $400,000 in Q1 2025. No growth this quarter may suggest we’ve hit a price ceiling. 

But the $400,000 figure doesn’t tell the whole story. 

Incentives remain widespread, with rebates and discounts of up to 10% off advertised prices still on offer in some estates. These deals ease the upfront cost for buyers, but the underlying land values remain historically high. 

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