--- title: "Melbourne Property Is Finally Bouncing Back. Here's the Data That Proves It." description: "Melbourne house prices posted their strongest quarterly gain in three years. Domain data shows 1.6% house growth and 2.1% unit growth. Here's what's driving it and where the opportunities are." author: Yan Zhu date: 2025-11-17 category: Guides url: https://premiumrea.com.au/blog/melbourne-property-finally-bouncing-back-data tags: ["Melbourne", "property market", "recovery", "Domain", "housing data", "investment timing", "affordability"] --- # Melbourne Property Is Finally Bouncing Back. Here's the Data That Proves It. *By Yan Zhu, Co-Founder & Chief Data Officer at PremiumRea — 2025-11-17* > Seven years of flat-lining. Three years of decline. And then, in the December quarter of 2024, Melbourne finally moved. A 1.6% quarterly gain for houses and 2.1% for units — the biggest jump since the COVID peak. The board is rotating, and Melbourne is next. Melbourne has finally — finally — posted a proper quarterly gain. According to Domain's latest House Price Report, Melbourne's median house price rose 1.6% in the December 2024 quarter, while units climbed 2.1% [1]. That might sound modest. It isn't. This is Melbourne's strongest quarterly performance in three years, and it's the first time since the pandemic peak that Melbourne's quarterly growth has outpaced Sydney's. If you've been following Australian property cycles for any length of time, you know what a board rotation looks like. Sydney runs first. Then Brisbane and Perth pick up the baton. Then, just when everyone's written Melbourne off, the capital flow rotates south and Melbourne puts in a multi-year bull run. We're at the rotation point. And my team has been positioning clients for exactly this moment since early 2024. In the past year alone, we've purchased close to 100 houses across Melbourne's southeast, and many of those properties have already appreciated $30,000-$50,000 from their purchase price [2]. Let me walk you through what the data actually shows, why Melbourne's recovery is structural rather than speculative, and where the opportunities are concentrated. ## The Domain numbers: what they actually mean Domain's quarterly report breaks Melbourne into segments, and the story within the segments is far more interesting than the headline. The 1.6% house price growth was led overwhelmingly by the affordable end of the market — the outer southeast (Casey, Cardinia), the north (Hume, Whittlesea), and parts of the west (Brimbank, Wyndham). These corridors, where median house prices sit between $600,000 and $850,000, posted growth rates well above the metro average [1]. Meanwhile, the premium inner suburbs — where medians exceed $1.5 million — remained relatively flat. The two-speed market I've been describing all year is still firmly in place. The unit market's 2.1% gain is also telling. When unit prices outpace house prices, it signals that affordability pressure is pushing buyers down the property ladder. They want houses but can't afford them, so they're buying units instead. This creates a compression effect at the bottom of the house market: the cheapest houses become the most sought-after because they're the last step before dropping to apartment living. This is precisely what we see in areas like Hampton Park, Cranbourne, and Frankston. The sub-$700,000 house market is tightening rapidly, with multiple offers on well-priced properties and days on market shrinking from 45+ to under 30 [3]. ## The board rotation: why Melbourne is next in line Australian property markets move in cycles, and those cycles rotate between cities. The pattern over the past 40 years has been remarkably consistent [4]: 1. Sydney leads the charge (2-3 year boom) 2. Brisbane and Perth follow (1-2 years later) 3. Melbourne catches up (1-2 years after that) 4. Regional markets lag everything by another year Sydney's latest cycle peaked in late 2023. Brisbane and Perth have been running hot through 2024, with Brisbane's median house price jumping over 50% from its pre-COVID level. Perth has seen similar gains. Melbourne, meanwhile, has been the laggard. Victoria's tax environment, its extended COVID lockdowns, and the resulting interstate migration outflow all weighed on the market. But those headwinds are fading: - Interstate migration to Victoria turned positive in 2024 [5] - The rental vacancy rate in Melbourne is at historic lows (below 1.5% in the southeast) - Victoria lost 20,000 rental properties over 18 months, creating acute supply shortage [6] - Affordability relative to Sydney remains highly attractive The quarterly growth outperformance versus Sydney is the canary in the coal mine. When Melbourne starts beating Sydney on a quarterly basis, the board rotation is underway. > "I've been buying Melbourne property since 2019," says Yan Zhu. "Not because I'm a Melbourne optimist — because the cycle always comes back. The people who bought Brisbane in 2020 look like geniuses now. The people buying Melbourne's southeast in 2024 will look the same way in 2027." ## Where the growth is concentrated (and where it isn't) Not all of Melbourne is created equal in this recovery. The divergence between affordable and premium suburbs is stark. Our internal data shows the following growth patterns over the past 12 months [2]: **Strong growth (8-12%+):** Cranbourne, Hampton Park, Frankston, Narre Warren, parts of Deer Park and St Albans, Moe/Morwell corridor. **Moderate growth (3-7%):** Berwick, Rowville, outer north suburbs around Craigieburn and Epping. **Flat to negative:** Inner-city apartments, premium eastern suburbs (Canterbury, Kew, Hawthorn), Mornington Peninsula. The pattern is clear. Affordability drives demand. Demand drives growth. And Melbourne's most affordable house-on-land suburbs — the ones where $650,000-$750,000 buys a three-bedroom home on 500+ square metres — are where the action is. We've been saying this all year. We said it in January. We said it in July. And every quarter, the data validates the thesis further. If you've been sitting on the sideline waiting for "proof" that Melbourne is recovering, the proof is now in the data. The question is how long you wait before acting on it. ## The rental supply crisis: the accelerant nobody's talking about Behind the price recovery is a rental market that's approaching crisis levels in parts of Melbourne. The Australian Financial Review reported that Victoria lost approximately 20,000 rental properties over 18 months ending mid-2024 [6]. Some were converted to owner-occupied housing. Some were sold by investors who couldn't stomach the holding costs in a high-rate environment. Some were removed from the long-term rental pool to become Airbnbs or were left vacant by overseas owners. The result: vacancy rates in Melbourne's southeast have dropped below 1.5%. In some corridors — particularly around Cranbourne and Hampton Park — vacancies are under 1% [7]. That's functionally zero slack. Every property that comes onto the rental market is leased within days, often with multiple applicants competing and offering above asking rent. For investors, this creates a powerful flywheel. Low vacancy means strong rental income. Strong rental income means positive cash flow. Positive cash flow means you can hold through any interest rate environment without financial stress. And while you're holding comfortably, the capital value is appreciating because the same supply-demand imbalance that drives rents also drives purchase prices. Our clients in the southeast are averaging rental yields of 5-6% after light renovation, with some achieving 7%+ when granny flat additions are factored in [2]. Those yields, in an environment where the property itself is also appreciating 8-10% per year, represent a genuinely rare investment opportunity. Melbourne has been the butt of jokes in the Australian property community for three years. "Worst-performing capital city." "Dan Andrews destroyed the market." "Everyone's leaving for Queensland." The jokes are aging badly. The data has turned. And the people who positioned early are already seeing the returns. > "If you wait for the headline to read 'Melbourne is booming' before you buy, you've already missed the boat," says Yan Zhu. "The headline lags the data by 12-18 months. The data turned positive six months ago. The smart money moved even before that." ## References 1. [Domain, 'House Price Report — December Quarter 2024'. Melbourne quarterly growth: houses +1.6%, units +2.1%.](https://www.domain.com.au/research/house-price-report/) 2. [PremiumRea internal portfolio data. Transaction records and valuation updates across Melbourne southeast, 2024.](#) 3. [CoreLogic, 'Days on Market — Melbourne Metropolitan Suburbs', Q4 2024.](https://www.corelogic.com.au/) 4. [CoreLogic, 'Australian Property Market Cycle Analysis', 40-year capital city rotation patterns.](https://www.corelogic.com.au/) 5. [Australian Bureau of Statistics, 'Interstate Migration Estimates', 2024. Victoria net interstate migration.](https://www.abs.gov.au/statistics/people/population/interstate-migration) 6. [Australian Financial Review, 'Victoria Loses 20,000 Rental Properties in 18 Months', 2024.](https://www.afr.com/property) 7. [SQM Research, 'Residential Vacancy Rates — Melbourne Southeast', Q4 2024.](https://sqmresearch.com.au/graph_vacancy.php) 8. [PropTrack, 'Melbourne Market Insights', November 2024. Buyer enquiry and listing volume trends.](https://www.proptrack.com.au/) --- Source: https://premiumrea.com.au/blog/melbourne-property-finally-bouncing-back-data Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent