Is Melbourne Housing Market About to Boom? (No one expected this) EP117

In October, as expected, Australia’s property market kept rising across the board. People who once swore they’d never buy are now thinking about getting in. This time, Melbourne’s pace has actually overtaken Sydney’s, turning it into the biggest dark horse. So, are Melbourne housing prices finally about to explode? Behind those market moves, the Australian Bureau of Statistics has just released inflation, jobs, and population data—all of which point to the rate-cut cycle likely being over. Policy-driven stimulus for housing isn’t likely to return in the short term. How long can this heat last? And looking ahead, what’s the single factor that truly supports Australia’s housing market? Let’s break down the October trend in Australia’s property market, so investors can get ready for the changes that are about to unfold.

October Market

In October 2025, Australia’s housing market extended the pattern of recent months, rising 1.1% for the month. That makes nine straight months of accelerating gains, with a very clear trend. At the start of the year, the overall market direction was still hard to read, but after the rate cut in February, the market began to rebound. The May cut confirmed the direction, and the pace picked up. After the third cut in August, the market continued to accelerate.

In October, Sydney rose by 0.7%. The pace was a touch slower than August and September, but the upward trend didn't change. The real surprise was Melbourne. It broke above the ±0.5% “flat range” baseline to post a 0.9% monthly gain, and its speed officially overtook Sydney. If that momentum holds, Melbourne could become the biggest dark horse in the coming months. We’ll break down the Melbourne property market in detail later in this video.

The trend in the mid-sized capitals hasn’t changed. Brisbane, Adelaide, and Perth have all been rising for more than two years. Their growth pace bottomed in February this year. Then came seven straight months of faster gains. In October, Brisbane jumped 1.8%, clearly breaking away from its July–August growth range and taking off. Perth rose 1.9% making it the fastest in the country for October. Adelaide was up 1.4%, a clear acceleration, though not as fast as the other two. Brisbane and Perth have completed a V-shaped rebound without any negative months, exactly as we forecasted in our annual wrap-up webinar last November. For those who’ve worried since two years ago that these three mid-sized cities had topped out—did you buy later on? Because they’re still heading up.

The three smaller capitals are moving a bit differently. Hobart hasn’t formed a clear uptrend; it’s been up and down across the last two years, but the direction is improving. Darwin has continued its surging pattern, up 1.6% in October, though the pace seems to have hit an inflection point. Canberra looks a bit like Darwin this time—its monthly gain pulled back slightly to 0.6%. Overall, both Darwin and Canberra are especially sensitive to interest rates: when rates are cut, prices rise; when cuts pause, the speed of increases eases a little. That ties back to market size—especially Darwin. Darwin’s median house price is the lowest in Australia, so even a small rate cut helps buyers at that price point more. With no cut in November, we expect that when the November data lands, the market may look a bit softer than October.

Those were the month-by-month moves, city by city. If you want to see the trend, the best tool is still the 90-day moving average. On the chart, it’s obvious that the large and mid-sized capitals are in an up cycle. Hobart, which kept swinging around, is now in an up cycle too.

The five green circles on the chart mark the moments over the past five years when I made market calls. All five were correct. Regulars who watch our monthly live streams have witnessed the full process—from forecast to verification. If you like to fact-check, feel free to dig into the previous webinar replays.

As of this video, Sydney, Brisbane, Adelaide, Perth, and Darwin have all reached record highs. Melbourne sits 1.4% below its March 2022 peak; Hobart is 8.9% below; Canberra is 3.5% below. Melbourne and Canberra will likely hit record highs no later than the end of the first quarter next year. That’s when it gets interesting: with seven of the eight capitals at record highs, will those who decide not to buy the moment they hear “record high” still want to step in? Many people hear that phrase and get worried—if it’s already a record, how much upside is left? Two and a half years ago, people who skipped Perth and Brisbane because they were at record highs now regret it a lot. Australia’s housing market can rise and fall in the short run, but over the long run it has kept climbing. Those who stay bearish over the long term probably haven’t grasped what investing really is. Buy, hold for the long term, and let compounding deliver average long-run gains—that’s the approach to Australia’s property market that suits most people.

Over the past twelve months, national prices rose 4.8%. Darwin led with 12.9%, while Melbourne rose only 1.9%. I haven’t bought in Darwin myself, and I haven’t recommended it to our members—not because I didn’t know it would rise or that rental yields are strong, but because it doesn’t fit our investment framework. For ordinary investors, the best path is to do solid due diligence, buy, and hold for 10–20 years to enjoy compounding and capital growth. I hope our members reach financial freedom sooner, gain the freedom to resign, and, like me, be able to go for a trip at any time. Over a 10–20 year holding period, I honestly don’t think Darwin will beat Brisbane. Of course, if you prefer short-term trades—sell in about three years—Darwin is a reasonable choice.

In the October data, we also noticed something interesting. One leading indicator of the overall market is days on market—how many days a listing takes to sell. If days on market lengthen, it suggests absorption is weakening; that can signal slower future price growth, or even a short-term pullback. Across the States and Territories, places where days on market clearly rose versus a year ago include Adelaide, Sydney, regional towns in Tasmania, and regional towns in Queensland. Of course, that’s the broad average; once you drill down to a specific regional centre or suburb, the trend can be different.

Listing volumes measure supply. If listings fall, supply is shrinking, and prices tend to rise. We’ve observed that Melbourne’s listings are up 1.2% from a year ago, and Canberra’s up 3.7%, pointing to a slight lift in supply. The most dramatic move is in Northern Territory towns outside Darwin, where listings have jumped 64.7%. That’s what happens when a market that barely moved a year ago suddenly sees a rush of buyer’s agents piling in; owners see a chance to make money and hurry to sell—after all, prices have already exceeded the previous cycle’s highs. The result is too many properties for the market to digest. Meanwhile, in Darwin itself, listings are down 44.9%, the steepest drop in the country. That’s not something local buying power alone can do; that’s because of interstate investors. Right now, Darwin is still in an uptrend. But if there’s the slightest shock and interstate investors withdraw altogether, just imagine what that market could look like.

If you have any questions about property investment, please book a free 15-minute discovery call on our website. If you want a team offering one-stop service to help you build a property investment portfolio, achieve financial freedom and retire early, join our VISION Membership by booking a 30-minute obligation-free discovery session to start with. Or to keep it simple, our data-driven buyer's agency service can help. We buy and manage properties for our clients anywhere in Australia. Links to the service are in the description below.

Australia’s Economy

On 5 November, the RBA chose to stay put and pause rate cuts. Why did the Central Bank make that call, and what will the path of cuts look like from here? To understand that, we need to see what the economic data is pointing to.

In the third quarter this year, inflation rose. Trimmed mean CPI jumped from 2.7% in Q2 to 3.0% hitting the top of the RBA’s 2–3% target range. If inflation pushes above 3%, the Bank may reconsider a hiking cycle.

In September, the unemployment rate rose from 4.3% to 4.5%. On the surface, it's not much, but it has climbed for four straight months. The RBA is now caught in a dilemma. Rising unemployment argues for cutting to stimulate the economy—lower companies’ financing costs so they can expand and hire. But inflation is showing signs of lifting, which argues for pausing cuts. In short, whatever you do with rates seems wrong. With Australia’s broader backdrop looking weak, this does feel a bit like “stagflation”—higher unemployment and higher inflation. Once you’re in that position, you don’t get out without paying a price.

Markets moved fast once the data hit. The probability of the next rate cut fell immediately from almost 100% to 14%. And if there’s one more cut left in this cycle, the market now expects it in May or June next year, after Q1 inflation is out.

The 5% Deposit: Instant Impact

Regular viewers know that on 1 October this year, the federal government rolled out the 5% deposit scheme—a support program designed for buyers with small deposits who don’t want to pay lenders’ mortgage insurance. Each city has its own price cap for eligible properties: Sydney’s cap is $1.5 million, Hobart’s is $700,000. When the policy launched, plenty of people wondered: would it push prices up, and by how much? What would it do to the broader market? We now have survey data.

Through October, properties within the 5% scheme’s price caps rose notably faster. For example, in inner Melbourne, homes under $950,000 were up 1.7% for the month, while those above $950,000 rose only 0.4%. Other cities show the same pattern. In Sydney’s north, properties above $1.5 million actually fell 0.3% on average in the month. These numbers show two things. First, the broad market direction is one thing, but sub-markets can move very differently. Second, a meaningful part of October’s faster overall rise came from rapid gains in stock covered by the 5% scheme. As the scheme’s effect fades and fewer listings fit its price band, that lift to overall prices will weaken.

Among today’s drivers of the housing market, falling rates have paused, and the odds of further cuts are shrinking. We’re not hearing about any new government measures to stimulate housing either. So if prices keep rising from here, only one driver remains: population. Right now, among the eight states and territories, only Queensland and Western Australia are positive on both net overseas migration and net interstate migration. That’s the main reason our strategy team continues to favour those two markets.

Is Melbourne About To Break Out?

At the beginning of the video, we noted that in October, Melbourne outpaced Sydney and showed signs of a breakout. So, where is Melbourne actually headed? Let’s look closely at the data from Cortality’s special report on Melbourne.

Over the past five years, Australia’s average home price is up 46.8%, while Melbourne has risen only 17.5%—a clear underperformance. Rent growth has also lagged the national average by about 25%.

There is a silver lining: Melbourne’s price-to-income ratio has improved, coming down from 8.2 times in 2017 to 6.9 times now. Homes have become more affordable, bringing more first-home buyers into the market, and Victoria’s owner-occupier share has risen. Why has Victoria’s market diverged so much from the national trend? Three reasons.

First, the land-tax threshold was cut from $300,000 to $50,000—almost every investment property now pays land tax. Second, there’s a uniform $975 increase to land tax. Third, the absentee owner surcharge was lifted.

In practice, for a rental with a land value of $650,000, those three changes lift annual holding costs by around $1,300. Add higher maintenance, insurance, and average interest rates, and the real holding cost climbs further. Meanwhile, rents haven’t risen enough to offset it. For many investors, holding a property in Victoria simply doesn’t stack up as well as buying in other states and territories. Investment demand weakens, and Melbourne prices struggle to rise. You might ask, what about population?

Since the pandemic, Victoria’s population growth has slowed noticeably, and net interstate migration has been consistently negative—Melbourne residents moving out to other states and territories. Add the big development push in recent years, which lifted supply, and it’s easy to see why prices have risen slowly.

But the latest data does show signs of a turn. Net interstate migration has flipped from negative to positive—people from other states and territories are now moving to Melbourne. Melbourne’s relatively lower prices have squeezed developer and builder margins, reducing new approvals—new construction is slowing, and supply is cooling. Total listings on the market are down 15% from a year ago, and 12% below the 10-year average. That’s why we’ve seen Melbourne start to rise moderately. October’s outperformance was likely driven by the 5% deposit scheme coming into play.

After a thorough review, we expect two trends for Melbourne. First, overall prices should rise moderately, but the conditions for a sustained, explosive rally aren’t yet in place. Second, performance will vary widely across segments—by location and even by suburb. We’re upgrading Melbourne’s overall rating to “suitable to buy.” But choose carefully: focus on areas with limited supply, places people genuinely want to live, and price points that fit the 5% deposit scheme for a higher margin of safety.

Our monthly webinar the “APS Market Insights” series is happening tomorrow, 6th November at 8 PM Sydney time. In this live session, we’ll break down everything that’s been happening in the Australian housing market throughout October, including key trends, local economic fundamentals, and what’s happening globally that could affect property prices in Australia. We’ll wrap up with a live Q&A. Seats are limited, so make sure to register now on our website — or just click the link in the description below.

Watch the video version of the blog on YouTube.

15 Minutes Free Consultation (Limited-Time Free Offer)

If you have any questions about Australian real estate, we invite you to use our 15 Minutes Free Consultation service. Once you have filled in the form, a professional property investment strategist will be in touch with you. They will assess your needs and provide fundamental advice. This service is designed to help answer general property-related queries. BOOK NOW.

VISION Membership

Our Flagship Service: VISION Membership. Your One-Stop Property Investment Manager – Build a Tailored Portfolio and Achieve Financial Freedom

Whether you're an employee, a professional, a business owner or even a new migrant, everyone has a financial goal for the future. The VISION Membership is designed to solve all the pain points in your Australian property investment journey through one single, comprehensive service.

By analysing your current financial situation and long-term goals, we'll tailor a property investment plan just for you. Our team will match you with the ideal mortgage structure, tax strategies, wealth planning, and legal support, empowering you to go further, faster, and smarter on your path to financial freedom.

VISION Membership is perfect for busy individuals who want a professional team to create, expand and manage their Australian investment portfolio. If you're looking for a dedicated team, including real estate investment experts, mortgage brokers, accountants, financial planners, and property solicitors, VISION Membership is your ideal solution.

Start with an obligation-free 30-minute discovery session on Zoom. BOOK NOW.

VISION Buyer’s Agent

No time for inspections? Tired of dealing with pushy selling agents? Unsure how much to offer or feeling nervous about auctions? Worried about buying the wrong property? If any of these sound like you, AusPropertyStrategy's Australia-wide VISION Buyer's Agent Service is here to help.

We provide end-to-end support to help you build an optimised property portfolio and achieve your financial goals—whether you're investing interstate, refinancing, or planning post-settlement leasing or resale. Our services cover everything from suburb research and property selection, to price negotiation, auction bidding, and post-settlement support.

Start with an obligation-free 30-minute discovery session on Zoom. BOOK NOW.

real estate australia,real estate investing,australian property,australian housing market,australian economy,australian property investment,australian property market,buying property,australian real estate,mortgage brokers brisbane,first home buyer,Australian Real Estate,Australian Real Estate Investment,Australian Property Investment,Real Estate Investment,Property Investment,Property Investment Australia,Passive Income,Positive Cash Flow,Australia Real Estate Investing,Australian Real Estate Investors,Australian Property Investors,Vision Wealth Mentors,Vision Real Estate Investors Australia,financial freedom, freedom through property investment,real estate investors,property investment,passive income,positive cash flow,real estate course,real estate courses,real estate training,australian property market,property investment brisbane,property investment sydney,melbourne property market,investing in brisbane,investing in melbourne,how to invest in property,buying properties,start investing in property,property investment strategy,how to buy investment property,property investing tips,best suburbs to invest in sydney,locations real estate,prime location,property growth by suburb,capital growth suburbs