Best suburbs to invest in Melbourne 2025

Thinking of buying property in Melbourne in 2025?

Melbourne’s real estate market has had some downturns over the last few years. Fortunately, after the interest rate rise in February, property prices turned around. The outlook is looking brighter for the remainder of the year.

Let’s look at how the market performed in 2024 before considering some expert predictions for Melbourne housing prices for the rest of 2025.

What did the Melbourne property market look like in 2024?

The latest CoreLogic figures reveal Melbourne dwelling values decreased by -3.0 per cent over the course of 2024. At the end of the year, the median dwelling value sat at $774,093, falling behind Brisbane, Adelaide, and Perth.

The median house value was $917,616 whereas the median unit value was $607,414. Since the last peak in March 2022, the median price has fallen by -6.4 per cent. However, values are still +8.4 per cent above what they were at the onset of COVID.

A surge in listings, subdued demand and a weaker state economy have all played a role in pushing the median house price lower.

“The number of homes for sale in Brisbane, Adelaide and Perth is more than 30% below average for this time of the year, while weaker markets like Melbourne and Hobart are recording advertised supply well above average levels,” says Tim Lawless, research director at CoreLogic.

On top of this, Karen Dellow, senior data analyst at PropTrack, attributes part of the decrease to interest rates and cost of living.

“Higher interest rates and a higher cost of living have reduced borrowing power, making buyers more reluctant to purchase in the current environment. This has led to more subdued auction clearance rates compared to the same time last year,” says Dellow.

By the end of the year, the outlook had started to get better. In November, homebuyer sentiment was at the highest it had been since the start of 2022 with +21.7 per cent more consumers believing it was a good time to buy a dwelling compared to three months prior.

Melbourne property market forecast 2025

Michael Yardney from Property Update, a leading property investment advisor, predicts that Melbourne’s property market could present an opening for buyers in 2025.

“The fact that the Melbourne housing market has not performed as strongly as some other capitals over the last year creates a window of opportunity for strategic property investors as Melbourne property values significant upside potential,” says Yardney.

In a similar vein, Jarrod McCabe, director of Wakelin Property Advisory, believes that Melbourne will be a buyer’s market for the time being. “From a Melbourne perspective there [are] going to be some really good opportunities from a buyer’s point of view,” says McCabe.

On the other, Simon Pressley, head of research at Propertyology, has a more cautious view that’s worth considering. “Melbourne’s net population decline of 82,000 over the last 5-years speaks volumes about its resident’s disapproval,” says Pressley. “And prevailing conditions will ensure that it continues to be sub-par for the next 5-years.”

How are house prices in Melbourne expected to change in 2025 and beyond?

Accounting firm KPMG predicts that Melbourne house prices will grow by +3.5 per cent during 2025, matching Canberra and outpacing all capital cities other than Perth. The growth is expected to continue into 2026 with house prices predicted to rise by +6.0 per cent.

KPMG’s chief economist, Dr Brendan Rynne, believes the growth will start after March. “It will be zero growth in the March quarter, and then growing for the remaining three quarters of this year,” says Rynne.

He attributes the growth to a combination of an interest-rate cut and a decrease in new housing approvals.

Similarly, Westpac forecasts that median dwelling values across all major capital cities should have a +7.0 per cent increase in 2026, with Melbourne outperforming the rest.

According to Oxford Economics, the median house price in Melbourne is expected to grow to $1,280,000 by June 2027, an increase of +21.0 per cent.

What's the Melbourne apartment market forecast?

Units are also expected to have strong growth with a predicted increase of +4.7 per cent in 2025.

In 2026, Melbourne units are expected to have the highest growth compared to any other capital city with a predicted rise of +7.1 per cent.

By June 2027, unit prices are predicted to climb to $780,000, an increase of 20.0 per cent.

With cost of living pressures still high, Michael Yardney believes that townhouses and villa units will be increasingly popular. “Villa units in Melbourne in suburban suburbs make great investments as they are popular amongst young families and older couples,” says Yardney.

What are the best suburbs to invest in Melbourne in 2025?

Here are some of the best suburbs to invest in Melbourne and regional Victoria this year, as recommended by leading property experts from around Australia.

Shepparton, VIC 3630

Shepparton is an affordable option for those interested in a regional investment. The median price sits at just $462,250 for houses and $389,000 for units. It delivers strong rental returns across the board — 5.0 per cent for houses and 5.2 per cent for units — with a tight vacancy rate of just 1.3 per cent. The suburb is a key regional centre 180km north of Melbourne with growing infrastructure, transport links and facilities.

Bairnsdale, VIC 3875

Bairnsdale was selected by Adrian Knowles, CEO of Harcourts Australia, as a suburb to watch thanks to, “this area’s high yield attraction.” The suburb is a regional option located in the scenic Gippsland area with a median house price of $466,000 and unit price of $351,250. Despite the affordability, it boasts some of the highest yields in the state with 4.3 per cent for houses and a standout 7.8 per cent for units. The low 1.3 per cent vacancy rate reflects the strong demand.

Cranbourne, VIC 3977

Located in Melbourne’s south-east, Cranbourne offers a great balance between returns, demand and potential growth. Rental yields currently average at 4.1 per cent for houses and 5.4 per cent for units. The median price is $665,000 for houses and $479,500 for units. New estates, schools and commuter connections have created strong demand in the area, reflected in the 1.4 per cent vacancy rate. 

Ferntree Gully, VIC 3156

At 0.9 per cent, Ferntree Gully has one of the lowest vacancy rates on this list. On top of the strong demand, there are stable returns with average yields of 3.2 per cent for houses and 5.4 per cent for units. Median prices are $890,000 for houses and $662,750 for units, making this an affordable option despite being just 27 kilometres from the CBD.

Ferntree Gully has been listed as a suburb primed for growth by a number of property experts from Ray White, Stockdale & Leggo and Smart Property Investment. The proximity to national parks, excellent schools, parks and transport links are expected to attract more and more young families.

Altona North, VIC 3025

Altona North offers softer rental yields of 3.5 per cent for houses and 3.1 per cent for units. However, the 1.2 per cent vacancy rate points to the suburb’s strong rental demand. The median house price sits just under a million at $950,000 whereas the median unit price is $721,750.

In the McGrath Report 2025, John McGrath, CEO and founder of McGrath, explains that Altona North offers a great mix of transport links and affordability. Along with being close to the bay and only 10km from the CBD, the suburb is popular with commuters and families.

“With the West Gate Tunnel due for completion in 2025, the west is set to become more connected than ever to the CBD and the rest of Melbourne,” says McGrath. “Less pricey than its waterside neighbours to the south, Altona North still boasts lifestyle, with its golf course, Kororoit Creek Trail and multiple sports centres.”

Spotswood, VIC 3015

Across the West Gate Bridge, Spotswood returns yields of 3.1 per cent on houses and 4.5 per cent on units, at a vacancy rate of 1.3 per cent. Median house and unit prices are $1,115,000 and $610,000 respectively. It's famous for its village atmosphere, industrial-style cafes, and easy train access to the CBD.

Coburg, VIC 3058

Coburg continues to perform steadily with yields of 3.7 per cent for houses and 4.9 per cent for units. The 0.8 per cent vacancy rate is the lowest on this list, highlighting the intense demand in the area. Median house values are approximately $1,160,000, whereas unit values are more affordable at $566,000. The suburb has a multicultural atmosphere, trams, coffee shops, and close proximity to universities and hospitals.

Wheelers Hill, VIC 3150

Wheelers Hill offers a 2.6 per cent yield for houses and a strong 5.5 per cent for units. The vacancy rate sits at 1.9 per cent, reflecting healthy demand. The suburb currently has a median house price of $1,450,000 and unit price of $960,800. Charlotte Pascoe, CEO of Stockdale & Leggo, has named Wheelers Hill a top investment suburb thanks to its stability over the last year.

“In an unsteady market, Wheelers Hill has demonstrated consistent growth over the past 12 months and is expected to maintain a promising year ahead,” says Pascoe. “This kind of stability is a key factor for investors and ultimately promotes further development.”

Located 23 kilometres south-east of the CBD, Wheelers Hill is known for its larger homes, excellent schools, and access to recreational facilities such as Jells Park.

St Kilda East, VIC 3183

A hotspot for renters, St Kilda East benefits from a 3.4 per cent house yield and high 5.8 per cent unit yield, with a vacancy rate of just 1.4 per cent. Median house and unit prices are $1,695,500 and $575,000, respectively. Its heritage street appeal, cafes, and proximity to the sea keep it firmly in the crosshairs of investors.

Glen Waverley, VIC 3150

Despite the suburb’s already higher values, Glen Waverley’s growth isn’t expected to stop any time soon. The current median price is $1,300,500 for houses and $940,000 for units. According to Star Investment, values are expected to increase by +5.0 to 7.0 per cent this year.

Alongside the capital growth potential, Glen Waverley delivers 2.6 per cent yields for houses and an impressive 5.5 per cent for units. The elite school zones, cultural diversity and rail links attract demand from families and long-term tenants, as evidenced by the 1.9 per cent vacancy rate.

Frequently asked questions about best suburbs to invest in Melbourne