Melbourne has retained its title as Australia’s third-most affordable capital city, behind only Darwin and Hobart, even as the local market edges higher in value.
Fresh figures from property research group Cotality show Melbourne’s median house price has reached $803,424, after a 0.4 per cent rise in July.
Prices in the Victorian capital climbed 1.2 per cent in the past three months and 0.5 per cent over the year, delivering a total return of 4.3 per cent for homeowners.
Nationally, the median dwelling value has reached $844,000, a 0.6 per cent gain last month and a 3.7 per cent rise over the past year.
The lift in prices follows the Reserve Bank’s February interest rate cut, which boosted buyers’ borrowing power and helped reignite activity across the housing market.
Cotality head of research Eliza Owen said the rate cut had “taken home values about 3 per cent higher through the year to date, or the equivalent of another $25,000 being added to the median dwelling value in Australia”.
Gains are being recorded in every capital city, reflecting a broad-based recovery.
Darwin was the standout performer in July with a 2.2 per cent monthly jump. But it still holds the crown as the nation’s most affordable market.
“When it comes to Darwin, it’s a low price point, but it’s also got strong gross rent yields,” Owen said.
“Investors are seeing an opportunity not just for short-term capital growth but for solid rental returns.”
While Perth (up 0.9 per cent), Brisbane and Adelaide (each up 0.7 per cent) posted stronger growth than Melbourne, the city’s steady gains come amid challenging affordability conditions.
Economists warn that while lower interest rates are drawing more buyers into the market, high prices and deposit hurdles continue to lock out many first-home buyers, especially as cost-of-living pressures erode household savings.
A shortage of homes for sale is adding further upward pressure to prices. Listings remain almost 20 per cent below the five-year average, while auction clearance rates remain robust, signalling strong competition among buyers.
Finding opportunities under the median price
For those looking to buy below the median price, there are still pockets of opportunity in Melbourne.
In the city’s west, suburbs such as St Albans, Deer Park and Ardeer offer family homes with strong transport links.
Similarly, the north provides great value in suburbs such as Thomastown and Lalor, which have good city access and growing infrastructure.
For buyers willing to look beyond the city, Victorian regional centres continue to offer strong value.
Bendigo, Ballarat, and Geelong provide a mix of affordable housing, growing infrastructure, and community amenities.
With improved rail links and an increase in flexible work arrangements, many buyers are finding they can achieve their homeownership goals in regional Victoria without sacrificing their careers.
Looking ahead, analysts expect prices to rise modestly through the rest of 2025.
Another rate cut in September could add fuel to demand, but stretched affordability is likely to keep growth in check.
This story first appeared on View.com.au. Read the original here
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