Melbourne Property Market Stalls While Other Cities Soar! Crash Coming? [AusPropertyStrategy102]

Fresh data on the Australian property market just dropped this week, and August saw national prices accelerate for the seventh straight month! If you think this is just a blip, think again—you're way off. Sydney, Brisbane, Perth, and Adelaide kept the momentum going, but Melbourne lagged this time, barely moving and slipping back to flat territory. Behind this surge, is it a golden chance to cash in, or a massive pitfall lurking in the shadows? Especially with the RBA's rate cut pattern: every time prices pick up speed in the first month, then they tend to ease off gradually. Will the market repeat that pattern? 

In today's episode, I'll dive deep into the logic driving this boom, covering which cities are ahead, which ones are trailing, and why prices are defying soft economic signals to climb anyway. But the real problem is that there is a hidden factor that could turn the whole thing upside down. If you're trying to decide whether to jump into the property market or are already invested and looking to play it safe, stick around. I'll explain everything you need to know about the current market. 

August Property Market Surge

In August 2025, the Australian property market kept up the trend from the previous months, rising another 0.7% and marking the seventh straight month of accelerating growth. The national market hit bottom with a -0.1% drop back in December last year, then entered this crucial rebound phase. January, February, and March saw continuous acceleration. The turning point came in February. But April brought a slight slowdown in momentum, thanks to election uncertainty and the fading effects of the February rate cut. Once the election wrapped up and rates dropped again, June picked up the pace, and July followed suit with the same 0.6% rise as June—again, as the prior cut's boost effect faded. Connect the performance over these recent months, and you see a clear upward cycle taking shape. August's rate cut pushed the market to accelerate once more. Looking at the pattern from the first three cuts, prices always speed up in the month of the cut, ease a bit in the second month, slow further in the third, and then ramp up again with the next cut. If that holds, September's national growth might not be as strong as some expect. We'll know for sure when the data drops.

Sydney's market jumped 0.8% in August alone, a clear acceleration from June and July. Historically, the national price trends often mirror Sydney's, since it's the country's biggest property hub. Melbourne surprised everyone this time—its upward run stalled, with just a 0.3% rise, slower than June and July. By our standards at AusPropertyStrategy, Melbourne hasn't broken 0.5% monthly growth in the past seven months; it's still basically flat. This dip makes it even less likely to push past that 0.5% threshold and confirm a real uptrend.

I know plenty of buyers' agents and online commentators are pushing Melbourne right now. When you hear that, first ask who's saying it. If it's an agent focused on Melbourne, don't take it seriously—they need to talk it up to stay in business. At AusPropertyStrategy, we're probably the only channel and business in Australia that can speak plainly without conflicts of interest. Why? One, we operate nationwide, no city limits. Two, we handle both new and established properties for investments. So we can call out any city or property type as good or not, and focus fully on serving our members by finding what fits them—not what we want to push. If you're eyeing Melbourne, here are a few principles to consider. For investing, buy in other strong cities first, then Melbourne. For owner-occupiers, no hesitation—buy in Melbourne today.

Now, shifting to the three mid-sized cities, Brisbane, Adelaide, and Perth have all been climbing for over two years straight. They bottomed out in terms of speed back in February, but still rose that month. Then, March through August marked six months of steady acceleration. Brisbane surged 1.2% in August, with momentum building strongly. Perth hit 1.1%, not far behind. Adelaide rose 0.9%, accelerating too. Clearly, Brisbane and Perth have nailed a V-shaped rebound without dipping into negative territory, just like we predicted in our November 2024 year-end live stream. Wonder if those folks who worried two years ago that these cities had peaked actually jumped in later—because they're set to keep rising.

The three smaller cities showed some divergence this time. Hobart hasn't built a clear uptrend; it's been up and down over the past two years, but the direction's improving overall—though August saw a -0.2% dip. Darwin's hot streak cooled sharply: after 2.2% in July, it managed just 1% in August. I know agents are hyping Darwin, with prices and rental yields climbing, but I haven't made a recommendation to our members yet. Our investment philosophy is buy and hold for the long haul, letting time and compounding do the work—looking 10 to 20 years out. Over that span, I'm not bullish on Darwin. Of course, if your approach differs or you have unique needs, weigh it yourself. Canberra's growth slowed again, continuing the trend from the prior two months, with just 0.4% in August—back to flat territory. As for Darwin and Canberra's futures, it's hard to pin down; their prices have been jumpy the last two years, rising one month and falling the next. For trends, if they don't accelerate in September post-rate cut, this up cycle might be wrapping up.

That's the monthly rundown for each city's market. To spot real trends, the 90-day moving average is your best bet—it smooths out quarterly data, cutting the noise from short-term swings. The chart shows it plainly: major and mid-sized cities are firmly in up cycles. Only Hobart's going down, and in decline territory.

Those five green circles on the chart? They're the points over the past five years when I made market calls—and all five nailed the trends. Regular viewers of our monthly lives have watched the full cycle of predictions and confirmations. Our call this time: the Australian market stays on this path for the next 12 months, holding the up cycle. We'll check back in 12 months to see if it panned out.

As of this episode's release, Sydney, Brisbane, Adelaide, Perth, and Darwin have all hit all-time highs. Melbourne's 3% below its March 2022 peak, Hobart's down 10.4%, and Canberra's off 4.6%. Remember when some Sydney-only agents on social media claimed Perth and Brisbane at highs meant no buys? That's a classic mindset trap. An all-time high doesn't mean it won't climb higher next month. Who knows if those agents are still in the game?

Auction clearance rates climbed higher in August, hitting 69.3%—up steadily since February, signalling a market getting hotter by the day. If a city's over 75%, it's a vendor's market. One tip: when checking clearances, stick to Sydney, Melbourne, and Brisbane—their volumes reflect true momentum. 

Rental yields held steady. The national average stayed at 3.7% in August. Sydney's lowest at 3.0%, thanks to high prices. Darwin still leads at 6.5%. Adelaide, Brisbane, and Melbourne hover around 3.7%. At current rates with 80% loans, only Darwin properties generate positive cash flow for long-term rents. But let me clarify: chasing positive cash flow alone shouldn't drive any investor's decision. Capital growth, long-term stability, local demographics, economic development, and diversity all matter just as much.

Overall, August showed a stronger Australian property market. Listings are 20% below the five-year average, prices are up, clearances are rising—every city except Hobart posted gains. That said, the latest economic data just out has shifted my view on where things might be heading.

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Australian Economic Fundamentals

Since the peak in 2022, inflation has dropped sharply. In the second quarter of this year, the trimmed mean CPI fell from 2.9% in the first quarter to 2.7%—the lowest since the fourth quarter of 2021. But July's year-on-year inflation rose to 2.7%, up 28% from June. That's no small shift. Inflation is a major factor the RBA considers for rate cuts. If it tops 3%, the RBA would likely pause cuts and even think about hikes.

Another key element is unemployment. Australia's rate has held steady around 4% for several months, with no real change in July at just 4.2%. The job market in the economy right now is in solid shape.

Consumer confidence hit a recent high in August, showing that people feel secure about their incomes and are ready to spend. Actual consumption figures rose 5.1% over the past 12 months. Why? Real wages have improved a bit. There are two types of wages: nominal wage, which is the amount you get in hand, and real wage, which adjusts for inflation to show true buying power. In the second quarter of 2025, real wages grew by 1.3%.

On immigration, the Labour government decided to increase the student visa cap by 10%. Permanent residency approvals stay the same this financial year at 185,000. But keep in mind, this came after widespread anti-immigration protests across Australia—hard to say it's not aimed at calming things down. If they suddenly bump it up by another 10% down the line, I wouldn't be surprised at all.

So think about all these factors driving property demand: higher wages, boosted consumer confidence, falling rates, the wealth effect from rising assets, stable jobs, more international students and migrants, and that 5% deposit scheme launching October 1. All of these create genuine buying pressure. On the supply side? New building approvals in July were basically flat compared to June. New home approvals are a leading indicator for completed supply 12 to 24 months out. Demand is way outpacing supply. That's why I predict this up cycle in the Australian property market will hold for at least the next 12 months. But there's just one wildcard: inflation.

September Rate Cut Fades Away

The RBA's next meeting is at the end of the month. With inflation trending up, I don't see a cut happening. Financial markets agree, pricing in only a 20% chance. The next cut would be 0.25% in November, and then the last one in this cycle, another 0.25% in April next year.

Consumer spending is picking up now, and from here to year-end, there are several spending peaks still ahead. Plus, electricity subsidies are winding down. Inflation does face upward pressure. If it keeps rising, what was planned as three cuts might shrink to two. Instead of monthly drops, we could see gaps of several months between them. That's the only thing that could shake rates and ultimately cap the height and length of this property upswing.

Sydney's Booming

I want to talk more on the Sydney property market this time. Sydney's last boom wrapped up in August 2024, and then it entered a correction phase. Around the same time, Brisbane, Perth, and Adelaide were exploding upward. Plenty of people said Sydney was done rising because prices were already too high and out of reach. But these past few months of gains in Sydney have proven them wrong. Sure, Sydney homes are pricey and at record highs right now. But that doesn't stop them from getting even pricier—or hitting new records next month. The idea that "people can't afford homes anymore" doesn't hold up. Who exactly among Australia's 27 million can't afford what kind of home, where? It's a meaningless claim. Property prices rise not because of those who can't buy, but because of those who can. Yes, more and more folks are priced out. But plenty who can afford it are still in the game. In Sydney's hot spots, it's common to see 500 people show up to auctions. So don't write off investing in Sydney just because of "new highs" or "too expensive." That's just a way for those scared off by prices to console themselves. This wave in Sydney will be aggressive, with double-digit gains in some suburbs.

Last week, I did my first English live stream, "APS Market Insight," covering the August market trends. In the webinar, I ran a poll: If you're buying an investment property now, where would it be? Among Chinese viewers, only about 20-30% picked Melbourne. But in the English-speaking community, around 60% did. Some still wanted Melbourne Docklands apartments, no matter what I said in the webinar. I was really shocked; their thinking must be swayed by all the noise on the market. It shows the English-speaking side has just as much mixed-up info from social media and advisors as the Chinese community. Looks like AusPropertyStrategy has a whole new front to tackle. We'll bring our mission—"no more lies in the Australian property market"—to the English side, helping more Australians see the market clearly and avoid getting ripped off.

For all our AusPropertyStrategy channel fans, our next monthly webinar in the APS Market Insights series is locked in at 8 pm on Thursday, 2nd October. In this live session, we’ll break down everything that’s been happening in the Australian housing market throughout September,  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.

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