Melbourne Home Prices Ease: Why Now Could Be the Best Time to Buy

Recent data show Melbourne’s median home price is now about $10,000 below its 2021 peak. After years of rapid growth, prices have levelled off. At around $1.083 million, Melbourne’s median house price is now closer to more affordable cities. At the same time, Victoria has added tens of thousands of new homes each year – around 55,000 annually. More supply and fewer hungry investors are helping to drive cooler prices. As a result, first-home buyers now make up roughly 30% of new home loans in Victoria, a much higher share than in most of Australia.

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Why prices are easing

A few key changes have driven this shift. In recent years, the Victorian government introduced extra land taxes and levies on short-term lets (like Airbnb) and vacant properties. These policy changes have made holding investment homes more expensive. Many investors who bought at higher prices are now selling up – they feel the risks (taxes, compliance and interest rates) outweigh the rewards. Property professionals say these are not long-term landlords, but everyday investors “forced out by rising costs and policy uncertainty”. With fewer investors bidding at auctions, owner-occupier buyers face less competition.

Meanwhile, Victoria’s pipeline of new homes has stayed strong. Around 55,000 homes are finished each year, keeping listings higher than in other markets. Even so, building approvals have recently slowed as developers chase smaller profits. In the year to June, new approvals in Victoria fell, while NSW saw a 32% rise. In short, supply growth has helped calm prices now, but future approvals may slow, potentially tightening supply later on.

Opportunity for buyers

• Less investor competition means more chance for owner-occupiers. With many landlords exiting Victoria for lower-tax markets in Queensland or NSW, there are simply fewer bidders on new listings.
  
  

• Better affordability window: Melbourne’s prices are still near their record highs, but just below peak, so buyers get more value now. At the same time, rental yields remain strong – rents are up about 33% since 2021 – meaning investment returns are still high if you do buy.
  
  

• First-timer momentum: Nearly three in ten new home loans are now going to first-home buyers. This reflects both government incentives and the fact that lower investor demand frees up properties for homebuyers.
  
  

• Policy reshaping the market: Taxes on investors have cooled demand. Economists note that removing tax breaks has reduced speculation and “should be celebrated rather than bewailed”. In other words, these changes are helping keep prices in check.
  
  

• Strong supply growth: More homes (55k+ per year in Victoria) mean a healthier market long-term. But remember: approvals have dipped recently, so the current buyer’s-market could tighten later if new building slows.
  
  

These factors together create a rare chance to buy before investor competition picks back up. As buyer’s agents, we see Melbourne as more affordable today – a good window for buyers to secure a property without the fierce bidding wars of the past.

Ready to make your move?

Now is the time to act. Prowealth’s buyer agents can guide you through this changing market. We’ll help you understand your borrowing power, start a property shortlist, and find the right home. Call Prowealth Properties on +61 433 853 248 or send us a message to book a free consultation. Our experts will work with you to turn this buying opportunity into your best property purchase.