Melbourne market underperforms despite $1,012 million milestone – realestate.com.au

The average house price in Greater Melbourne has risen to $1,012 million in 12 months, adding $55,400 to homeowners’ pockets.

PropTrack’s latest house price index, released today, shows the city’s typical house value remained higher than Adelaide, Hobart and Darwin’s figures of less than $1 million in December.

But the Victorian capital’s 4.7 percent growth lagged behind the more impressive percentage increases of other Australian capitals by 2025.

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Melbourne ended up below the 5.6 per cent improvement of the second-last placed ACT and the 16.9 per cent increase of top-ranked Perth.

Toby Balazs, director of the Real Estate Institute of Victoria, said the broader economic challenges facing the state had likely contributed to the property performance.

The PropTrack report said Australian house prices are expected to rise in 2026, but growth could slow with no interest rate cuts expected in the near future.

In December, a survey by financial comparison website Finder among 35 experts and economists found that one in three expected at least one interest rate increase in the coming year.

Victoria’s overall median home price, including houses, units and apartments, was $854,000 in December, the PropTrack report shows. Photo: NewsWire/Andrew Henshaw.

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Overall house prices in Melbourne have risen by more than 16 percent over the past five years, the lowest of any Australian state and territory. Perth and Brisbane led the country, with median values ​​rising by more than 97 percent over the period.

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“If there is a rate increase, I expect it would make what is still a relatively challenging market, in terms of affordability, even more difficult for buyers looking to enter the market,” Balazs said.

However, lower growth in average home prices made buying easier for many people, he noted.

And Melbourne remains an attractive proposition for investors looking for good capital growth in the coming years.

“The opposite or challenge to that are some of the challenges of owning property in Melbourne as an investor, in terms of taxes and regulations,” Mr Balazs said.

This included the Prime Minister Jacinta Allan-led government raising land tax in 2024 and the enormous weight of the crackdown on rental standards over the past 18 months, he added.

Over the past five years, total house prices in regional Victoria have increased by 33.5 per cent, reaching $586,000 in December 2025.

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The REIV is calling on the state government to provide more incentives to buy and hold rental properties in Victoria to help tackle the state’s rental crisis.

Regional Victorian homes reached a median value of $618,000 in December, up $42,100 from the same month in 2024.

Melbourne units grew by $24,200 to a typical price of $630,000, and regional Victorian units rose by $27,600 to $440,000.

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