Melbourne home prices surge more than any capital city so far in 2025 | PropTrack

The city’s home prices have had the biggest turnaround in price growth compared to all other state capitals in the last quarter. This is why.

Melbourne home prices have risen to begin 2025 more than any other state capital. 37 Derham St, Port Melbourne is currently on the market for $875,000-$925,000

Home hunters and investors are turning their eyes to Melbourne with the city recording the biggest acceleration in property prices of any capital so far this year.

PropTrack’s March Home Price Index revealed the city’s home values rose by 0.7 percentage points in the first quarter of 2025 after falling 1.3 percentage points in the December quarter— the fastest acceleration in property prices nationwide.

However, in the 12 months to March this year, Melbourne’s median dwelling price fell by about $17,580, or 2.26 per cent, from $795,580 to $778,000, making Melbourne the only city with negative annual price growth.

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A typical Melbourne house’s value sits at $895,000 while a unit is priced around $583,000.

It’s a similar story in regional Victoria, where the median dwelling price is down 1.53 per cent at $573,000.

REA Group senior economist Eleanor Creagh said there had been a clear shift in Melbourne’s market momentum triggered by February’s rate cut, contributing to the city’s move from negative to positive price growth.

Ms Creagh said more available housing stock, higher property taxes and larger unemployment played a role in the city’s weaker home price growth.

The four-bedroom house at 22 Glenelg Dr, Clayton South is listed for sale with a $880,000-$920,000 price guide.

Melbourne’s median house price is $895,000, according to PropTrack.

Despite Melbourne being the weakest performing capital city market since the pandemic, the comparative affordability had made the city more attractive, especially due to Sydney buyers.

The Property Bureau director Alastair Mairs said activity among prospective homebuyers and investors had picked up significantly in the past year but it still remained a buyers’ market.

“Our property prices are still behind where everyone was sort of expecting (them) to be, and there’s still opportunities for buyers out there,” he said.

The two-bedroom apartment at 1/199 Hotham St, Ripponlea is listed for sale with a $550,000-$570,000 price guide.

Melbourne’s median unit price is $583,000.

Mr Mairs said prospective property buyers were now looking for the next “little pocket” that was going to kick off.

“Being the second-largest city in the country, it bodes well for any investors to say, hey, let’s turn out attention back to Melbourne,” he said.

“Rental yields have really improved in the last three years, whereas the property prices haven’t. So that just makes it even more attractive for investors.”

The three-bedroom house at 40 Victoria St, Ballarat East is for sale with $580,000-$620,000 price hopes.

Regional Victoria’s median home price is $573,000.

Real Estate Institute of Victoria president Jacob Caine said the combination of a significant number of investors selling up across the state and a large amount of stock available has led to a decrease in home values.

Mr Caine said this had resulted in an over representation of largely unrenovated houses and apartments at lower price points hitting the market, presenting opportunities for first-home buyers to enter the market.

“Melbourne is primed for a very significant turnaround in 2025,” he said.

“Inquiry levels, bidder numbers, offer levels have all seen a dramatic increase, particularly since the Reserve Bank reduced the interest rates.”

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Originally published as Melbourne home prices surge more than any capital city so far in 2025 | PropTrack