Melbourne property: where to buy a home at 2025 prices, and why government activity centres could be the next to have values slump

The Melbourne suburbs where homebuyers can get a property for 2015 prices have been revealed amid warnings a key state government policy could leave values languishing in new areas.

Zoe De Koning

5 min read

March 23, 2025 - 5:00AM

Home prices in some parts of Melbourne are below where they were in 2015.

Melbourne property experts have warned an influx of new apartments around the Allan government’s new activity centres could be facing years of languishing prices.

It comes as new data reveals areas that had languished with flat or declining home prices for the past decade are now in the early stages of a turnaround.

Many of the suburbs had been struggling as a result of a rapid increase in housing volumes over the past 10 years.

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But PropTrack figures show Docklands’ $611,000 median unit price is up $13,500 compared to March 2015.

It’s a significant turn around from as recently as August last year, when a typical apartment in the CBD-adjacent suburb was $17,000 in the red compared to 2014.

Werribee South, where the $402,500 typical unit today is $106,500 below where it was a decade ago, has also improved. In August, 2024, it was $150,500 below 2014 levels.

The new PropTrack figures suggest time may be running out for first-time homebuyers and Melburnians grappling with affordability woes to buy units at time-travelling prices.

A Werribee South two-bedroom unit, sold for $469,000 in 2010, and $410,000 last year.

A Werribee South two-bedroom unit sold for $439,000 in 2010 and again for $405,000 in December.

However, prominent buyers advocate Cate Bakos said the Allan government’s proposal of an influx of new apartments and units in 50 key activity centres around Melbourne was worrying.

“I’m concerned about the activity centres they’re proposing, and in particular, the location of some of these high rise and high density areas, because we might find that the zoning is not all that optimal for first-time buyers,” she said.

She said a major issue was that banks were very “fussy” about zoning.

“When it’s not residential zoning, it can be a bit more problematic,” Ms Bakos said.

“However, I do also think that super high density zoning in an area that supports it isn’t necessarily a bad thing.”

Ms Bakos added that values were down in areas like Werribee South off the back of larger apartment developments ten years ago, and that more small new residences were likely also a factor in reduced medians today.

In Abbotsford this two-bedroom apartment sold for $495,000 in 2015, but only made $375,000 in a sale this month.

Meanwhile a one-bedroom unit in the suburb sold for $431,100 in 2011 achieved just $316,000 earlier this month.

“The problem with something brand new is usually when the building depreciates in the first few years, the dwelling loses value because the rate of depreciation outstrips the rate of land appreciation,” Ms Bakos said.

“It can certainly demonstrate that properties are losing value, and it’s not necessarily because the land is losing value, it’s often because there’s a lot of new stuff and it’s ageing really quickly.”

Strathmore is another suburb where the $723,000 median unit price’s fortunes have improved, with the figure up $108,300 compared to a decade ago. In August last year it was only at a $10,000 premium compared to 2014.

And in Maribyrnong, the $485,000 typical flat or apartment is now $25,000 dearer than in 2015, despite also only registering a $10,000 increase for the prior 10 years in August, 2024.

Melbourne currently has 13 suburbs where apartments are available cheaper than they were a decade ago, with PropTrack economist Anne Flaherty noting reductions in median prices had been more widespread across Melbourne over the past few years — which had been good news for homebuyers.

Essendon North apartments have also sold for losses, including this one-bedder sold for $348,000 in December, but that notched a $425,000 result in 2013.

A two-bedroom apartment in the suburb was sold for $470,000 in 2013, then just $386,000 in January.

“Melbourne has been the worst performing property market compared to March 2020, basically when the pandemic kicked off,” she said.

“We saw a lot of properties hit the market and there were a huge number of properties for sale.

“In a market like that, buyers have more power, which means that we don’t see prices rise as much, and we actually saw a lot of values move backwards in Melbourne.”

Asked about the new activity centres, Ms Flaherty said delivering enough new homes in key pockets around Melbourne was “absolutely essential” in ensuring prices didn’t run away.

“We typically see where there’s a lot of new development, home prices grow more slowly, and that’s not necessarily a bad thing because it means that affordability has improved,” she said.

“Victoria has historically been relatively better at supplying new housing compared to the other states and that is one of the reasons why our market has underperformed for price growth compared to the other capitals.”

While that was a “bad thing” for those who owned homes and wanted to see values rise, the economist said those hoping to get into the market for the first time would find a slow moving property market a “really attractive thing”.

James Coxon and Ewan Tremellen with their dog Quip, just after buying their apartments in Cremorne in 2017. Picture: Jason Edwards.

The PropTrack data also revealed the inner-city suburb of Cremorne was struggling with value growth, with the median unit almost $28,000 more affordable than ten years ago.

It’s also on the list to improve slightly from August last year, when it was down $42,300 for the decade.

Local unit owner James Coxon said he was still hanging onto two apartments in the suburb after changing plans to combine them into a single residence, with one now a “city pad” and the other rented out.

While Mr Coxon was well aware of the underperformance of the market in recent years, he said he wasn’t planning on selling the apartments any time soon.

“I don’t think we would cut our losses,” he said.

“(But) if the government was to change the laws around negative gearing or capital gains tax, I would absolutely look to liquidate those pretty quickly.”

Director of Ray White Werribee Michelle Chick said body corporate fees were also “holding prices back” in areas like Werribee South.

This Docklands apartment is among those now in the black, sold for $591,000 in 2017 and earlier this month for $655,000 — a $64,000 uptick in the space of eight years.

A one-bedroom unit in Prahran that sold for $419,000 this month was worth $435,000 in 2012.

“It is the fear of the interest rates increasing and those body corporate fees on the apartments there that hold people back,” she said.

“What we’re finding is that people have got less to spend because of all the increases.”

While the agent didn’t anticipate much growth in the short term, she remained optimistic about the future of the unit market.

“The confidence will come back a lot stronger with more interest rate decreases hopefully coming in the next few months,” she said.

Ms Flaherty is also anticipating the unit market will soon outperform the housing market, as more high-end apartments pop up around Melbourne.

A one-bedroom Carlton unit sold for $377,500 in 2010 has made just $370,000 in a sale this February.

“I actually think that Melbourne’s unit market has been really suppressed for a long time, but we’re now entering a situation where it’s extremely expensive to develop new apartments,” she said.

“Because of that, the apartments that are being built at the moment, they’re typically high end apartments … over half the new apartments on realestate.com are selling at that $1m plus level, which is really high.”

Ms Flaherty said there was a limited supply of more affordable, new apartments as a result.

“Even though historically we’re seeing the unit market underperform the housing market, I think that there’s a really good chance that’s going to shift,” she said.

“I think that there’s a very strong chance we will see unit values pick up growth in Melbourne as a result of the slowdown in new supply of affordable stock.”