Melbourne has been the worst-performing housing market among major capital cities since the onset of the COVID-19 pandemic.
Between March 2020 and April 2025, Melbourne dwelling values rose by 16.2%, versus 43.3% growth at the combined capital city level.
The underperformance of Melbourne’s housing market has seen its median house price fall to cyclical lows against the other capital cities.
Melbourne’s improved relative affordability has piqued buyers’ interest, with the city’s final auction clearance rate hitting its highest level since July 2023 last week.
Melbourne’s monthly average final auction clearance rate has also hit its highest level since June 2023.
As illustrated above, Melbourne’s auction clearance rate has historically correlated strongly with price growth, suggesting that Melbourne home prices are poised to rebound.
NAB’s Q1 2025 Property Survey revealed that 44% of industry participants believed that Victoria was at the start of a recovery, versus only 10% who viewed Victoria as a declining market.
Source: Q1 2025 NAB Property Survey
According to PropTrack, Melbourne’s median dwelling value in April ($781,000) was the second most affordable out of the five major capital cities, just behind Perth ($779,000).
As a result, Melbourne is attracting strong interest from first home buyers and bargain hunters.
