Melbourne’s property market tipped to be worst performer of all Aussie cities in 2025

Economists have predicted that Melbourne’s market will be worst performing capital city around the country next year. However some experts think conditions could improve. SEE THE STATS

4 Coledale Close, Endeavour Hills, Vic 3802 – for herald sun real estate

Melbourne’s property market is expected to perform the worst of all Australian capital cities in 2025.

New research from PropTrack revealed the city’s home prices could fall by 1 per cent or rise by just 2 per cent next year following a decline of 1.6 per cent in 2024.

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Brisbane and Adelaide’s median home values surpassed Melbourne this year, and Victoria’s capital could also be eclipsed by Perth as soon as May if the respective property markets continue at their same trajectory.

Key to the fall is the number of homes listed for sale in Melbourne, which reached its highest point since 2012 — increasing 9.5 per cent this year.

29 King Edward Ave, Albion is on the market right now for $780,000-$850,000.

This five-bedroom house is listed with a price guide around Melbourne’s median home price of $792,000 as of November.

PropTrack economic research director Cameron Kusher said this meant homebuyers could be a lot more selective about what they wanted to purchase, leading to decreasing prices. But sellers needed to adjust to those conditions, he said.

“Melbourne hasn’t seen the same level of price growth in the last five years as we’ve seen elsewhere, so people don’t have as much equity in their homes,” Mr Kusher said.

“The state government decided to put up taxes on investors and that’s led to a lot of people selling properties in Victoria, but it’s also led to few people wanting to come and invest.

“I think for investors, the hits just keep on coming.”

A slew of rental returns has also hit investors on top of a surge in windfall gains tax and land tax.

86 Liverpool Rd, Kilsyth last sold in 2018 for $772,000 and is on the market for $780,000-$850,000.

The three-bedroom house has a $780,000-$850,000 price guide.

This includes ending no-fault evictions, penalising landlords for withholding bonds without evidence and capping rent payments to a maximum of four weeks worth if a tenant breaks a lease.

Property Investment Professionals of Australia (PIPA) chair Nicola McDougall said Melbourne continued to suffer from a variety of negative elements such as land tax, a raft of restrictive rental reforms and an underperforming construction sector.

“That said, investors are quite bullish about Melbourne, which may ignite a market recovery as occurred in Perth a number of years ago,” Ms McDougall said.

REIV chief executive Kelly Ryan said it was imperative that any new property reforms encouraged to stay in or return to the market.

Hotspotting director Terry Ryder said though Melbourne’s property market had not had a good year, he believed it would start to improve next year thanks to the price difference with Sydney and higher population growth.

“This will occur despite Melbourne having the worst state government and the highest taxes in the nation,” Mr Ryder said.

The Real Estate Institute of Victoria (REIV) chief executive Kelly Ryan said it was imperative that any new property reforms encouraged investors to stay in or return to the market.

The REIV is pushing for the state government to offer tax incentives for developers of build-to-rent multi-unit buildings, land tax discounts for investors who keep their properties in the long-term rental market, and incentives for landlords who sign leases for three or more years.

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Originally published as Melbourne’s property market tipped to be worst performer of all Aussie cities in 2025