Melbourne property market analysis: value, challenges, and growth

In this episode of the Property Playbook, host Terry Ryder speaks with Matthew Hughes, Managing Director of Capital Property Advisory, about why Melbourne’s property market is now being viewed as one of the most compelling value opportunities in Australia. With a median house price of around $980,000, Melbourne sits roughly $600,000 below Sydney, marking the largest gap since 1999.

Once the nation’s second most expensive city, it has now been overtaken by Brisbane, Perth, and Adelaide, creating what some see as a rare entry point for investors.

The market’s current position reflects a series of challenges, including prolonged COVID-19 lockdowns that drove population outflows, alongside multiple tax changes and tighter rental regulations. Around 24,000 rental properties have exited the market, and yields remain lower compared to cities like Perth.

However, the long-term fundamentals are shifting, with Melbourne forecast to lead Australia in population growth, driven by international migration, and supported by Victoria’s $213 billion infrastructure pipeline, including the Suburban Rail Loop.

Ryder and Hughes highlight a counter-cyclical strategy, encouraging investors to act while competition remains subdued and auction activity is lower. Key opportunities are emerging in Melbourne’s middle-ring suburbs, as well as in growth areas like Geelong, which offers stronger yields.

Regional centres such as Ballarat and Bendigo are also gaining traction among budget-conscious investors. While Perth and Brisbane may outperform in the short term, Melbourne and broader Victoria are tipped to deliver stronger returns over the next four to five years.