Stunning Melbourne turnaround puts end to brief national downturn

Blink and you miss it.

National property prices have reversed a brief downturn, breaking a shallow three month run of sliding home values according to CoreLogic data released Monday (3 March).

Remarkably, the strongest growth (0.4 per cent) was recorded in Melbourne and Hobart, previously two of the weakest capital city markets in the country. For Melbourne, the median dwelling value increase marked the end of ten months of property price declines.

Nationally, property prices were up 0.3 per cent for the month but were still down slightly over the quarter.

Melbourne also led the gains according to PropTrack’s monthly data, with Eleanor Creagh, REA Group Senior Economist, saying February’s rate cut boosted borrowing capacities, while improving affordability and buyer confidence have driven renewed demand and price growth.

“After a period of sustained higher interest rates, buyers who held off purchasing are re-entering the Melbourne market.

“Auction clearance rates have strengthened, reflecting renewed competition.

“Despite the bounce in February, prices in Melbourne remained 2.5 per cent below their levels a year ago.

“Price momentum has been weaker in Melbourne for much of the past five years, partly due to weaker economic conditions, greater buyer choice and higher property taxes.

“Additionally, construction activity in Victoria has aligned more closely with population growth over the past decade.”

In a month of striking reversals, with changes from 0.2 to 0.3 per cent, the mid-sized capitals of Brisbane, Perth and Adelaide have lost their mantle as the strongest growth markets.

Perth’s value growth has slowed more sharply than the others, with downward revisions over recent months dragging the quarterly change to just 0.3. This compares to Adelaide and Brisbane, which are still leading rolling quarterly growth trends, being up 1.2 per cent and 0.9 per cent respectively over the past three months.

The latest uptick in the national median property price comes as listings retract.

New listings coming to market across the combined capitals were tracking 4.7 per cent lower than a year ago over the four weeks to February 23, and 1.5 per cent below the previous five-year average.

“Although total advertised supply levels are almost 1 per cent higher than a year ago, listings remain 7.9 per cent below the previous five-year average and the reduced flow of fresh stock to market could be supporting some upward pressure on prices, especially if buyers are becoming more active amid higher sentiment and lower rates,” Tim Lawless, CoreLogic’s Research Director, said.

Regional property prices have outpaced the capital cities over the past year, up 5.5 per cent to the cities’ 3.2 per cent.

This has continued in February, however, there has been some diversity in these trends between states. The monthly change favoured Sydney, Melbourne and Hobart over their regional counterparts.

Rising prices spell trouble for young buyers

First home buyers will be less than enamoured with the latest property price rise news.

In Adelaide, for example, years of strong growth have seen the price of entry-level homes exceed the rest of the country.

The latest Domain First Home Buyer Report the price of an entry-level home in the South Australian capital has increased by 82.5 per cent over the past five years, from $377,000 to $689,000.

For an Adelaide couple aged 25 to 34 and earning average wages to save a 20 per cent deposit, it will now take 5.5 years.

The time it takes to save for a deposit on a unit has dropped by two months across the combined capitals, while the corresponding time for entry-priced houses has increased by one month.

Across the combined capitals, it takes around 20 months less to save for an entry-priced unit than a house. This difference is even greater in Sydney and Canberra, at two years and five months and two years and four months faster, respectively.

Brisbane, Adelaide and Perth were the only cities where the time to save for an entry-priced house or unit deposit increased, as double-digit price growth outpaced wage growth and higher saving rates.

Part of Melbourne’s new-found appeal may be down to the fact it is the only capital city where the time to save for both an entry-priced house and unit deposit has decreased over the past five years. As a result, Victoria now leads the nation in first home owner participation.

Rents also on the rise

Just when it seemed renters were in for a reprieve in 2025 from the rampant rises of the past few years, February has delivered another disappointment.

National rents rose by 0.6 per cent in February, the strongest monthly gain since May last year.

Tenants will be hoping it is just a seasonal blip and not a return to the 0.9 per cent rise recorded in February last year or the 1.2 per cent gain seen in February 2021 at the height of the rental boom.

“Rental trends are highly seasonal, and the pickup in rental growth through the first quarter is likely driven by this seasonal phenomenon,” Mr Lawless said.

“The broader trend points to a slowdown in rental growth as households become larger and net overseas migration normalises.”

The most significant slowdown in annual rental growth has been recorded across the unit sectors of Sydney, Melbourne and Brisbane.

Annual growth in Sydney unit rents has slowed from a peak of 17.9 per cent in April/May of 2023 to 2.7 per cent. Unit rents in Melbourne slowed from a peak of 15.2 per cent over the 12 months to May 2023 to 3.2 per cent. Brisbane’s annual trend has eased from 15.3 per cent in June 2023 to 3.3 per cent.

“These cities have also seen the biggest impact from normalising net overseas migration, which, together with a trend towards larger households, has helped to take some heat away from rental demand,” Mr Lawless said.