Melbourne ranked second-worst home market in Australia in past five years: Propertyology

Melbourne has been ranked one of the nation’s worst markets by an influential property research group that blames the state government for the mire. But three Vic areas have bucked the trend.

Nathan Mawby

@mrmawby

3 min read

February 9, 2025 - 5:01AM

Victoria was ranked as one of the worst-performing property markets of the past five years — but there were pockets where prices still had big jumps. 8 Boston Court, Sorrento sold for $1.333m in 2024, up from $515,000 when it changed hands in 2010.

Melbourne has been ranked Australia’s second worst property market of the past five years by an influential property research group that blames the Victorian government for the mire.

But there are three areas around the state where home prices have beaten the odds, doubling in price in the past five years, and there are about 45 Melbourne suburbs still living up to the old adage that homes double in price every 10 years.

Propertyology boss Simon Pressley has urged Australian housing investors to boycott the state, and has just ranked the Victorian capital’s 20 per cent uptick since 2020 as the second worst in the nation for any city or town with a population of at least 15,000.

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Only Alice Springs was worse at 9 per cent growth.

Mr Pressley said while he loved Melbourne and Victoria, he would be “negligent or irresponsible” to recommend it to investors, particularly given the level of debt owed by the state government, as well as the state’s hefty property taxes.

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“We haven’t said everyone needs to sell and be fearful and that there will be a downturn and a crash,” Mr Pressley said.

“Melbourne will lose a little value this year, but it’s a good time to buy if you are a first-home buyer or a family, because you have other motivations than capital growth.

“But the performance compared to the rest of Australia will be at the bottom of the ladder. And it’s going to be like North Melbourne (AFL), at the bottom of the ladder for quite a while yet.”

Mr Pressley’s research did mark Shepparton and Mildura among the best performing areas around the state, with 75 per cent and 63 per cent growth respectively in the past five years.

Propertyology's head of research Simon Pressley said Melbourne was languishing at the bottom of the property ladder in Australia.

The property pundit said this wasn’t surprising as towns and city’s that centred on agribusiness had dominated the list of top performing areas nationwide in the timeline, largely because they generated their own local economy that reinforced demand for housing.

However, PropTrack figures show plenty of areas that defied Pressley’s gloomy analysis, but that were excluded due to their population — or being a suburb of a larger city or town.

Terang near Warrnambool has doubled in value in the past five years, soaring 110.2 per cent from $210,000 to $402,500.

The next best performing area was Dimboola — north west of Horsham — where an almost $140,000 (109.1 per cent) growth spurt has doubled the typical house price to $265,000.

6 Elizabeth St, Dimboola sold in 2024 for $245,000 — up from its previous sale price of $70,000 in 2018.

Ivanhoe East’s $1,271,250 median unit price was the only one to double in metropolitan Melbourne in the past five years, rising more than $630,000 (101.9 per cent) since 2020.

There were 45 areas where the median house or unit price doubled in the past decade, headed by Cobblebank, Mickleham and Weir Views.

PropTrack Economist Paul Ryan said historically most homes in Victoria took closer to 12 years to double in value.

13 Ewing St, Terang was worth $272,000 in 2017 when it changed hands — then sold for $550,000 last year.

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“You are very lucky if you double your home’s value in five or 10 years,” Mr Ryan said.

He noted that suburbs with new housing estates often appeared in five and 10-year growth lists as they went from a smaller number of older homes being sold to a larger number of brand new residences.

Holiday home markets across the Mornington Peninsula were also heavily represented in the 45 top performing areas of the past decade, however the past year’s data shows they have begun to lose value.

But some pockets such as Narre Warren North and Frankston North have managed to double in value in the past decade and have remained stable in the past year.

29 Wirilda Cres, Frankston North sold in 2024 for $595,000 — more than double the $245,000 price it sold for in 2013.

Mr Ryan said the area’s showed that with good research and timing it was possible to buy a home that would gain substantial value.

However, he warned the next decade was unlikely to see home value growth repeated the way it was in the past 10 years, as interest rates were likely to be higher than the record lows that sparked most of the growth in recent history.