Melbourne’s housing market has slowed down from its highest point, making it a good time to buy. In 2021, the average house price was over $1 million, but now it’s about $10,000 less. This change has happened mainly because of new government rules and more homes being built. The Victorian government introduced higher land taxes on investors (roughly $1,300 a year on a $650K home) plus levies on Airbnb and vacant homes. These moves have slowed investor competition, giving first-home buyers a better chance, first-home buyers now make up nearly 3 in 10 new home loans in Victoria, even as their share fell nationwide.
Key Factors in Melbourne’s Market
- Prices easing from peak: Melbourne’s median house is about $1.083 million, just $10K off its record high. With prices flat or gently falling, it’s an unusually affordable window for buyers.
- Investor tax policies: New land tax, Airbnb and vacancy levies have discouraged many investors. As landlords exited, rental listings fell from 678K to 655K, but this reduced competition in the buying market. Economists note that these tax changes have helped improve affordability.
- More homes being built: Victoria has added over 55,000 homes per year for the past decade. Steady supply keeps more properties on the market, helping to stabilise prices. For example, Melbourne’s listings remain higher than in other capitals.
- Shifting investor demand: As Victoria’s investor activity falls, many investors are focusing on other states (New South Wales, Queensland, South Australia) where approvals jumped. In fact, building approvals rose 32% in NSW but declined in Victoria over the latest year. This suggests Melbourne might avoid a quick rebound in prices as investors chase deals elsewhere.
What This Means for Buyers
For buyers, lower investor competition means less bidding pressure and a rare entry window. First-time and owner-occupier buyers are already benefiting – with more homes and fewer bidders, it’s easier to get into the market. Melbourne is now one of the more affordable big-city markets. Strong home-building also suggests a more stable market ahead, though falling approvals hint supply could tighten later. Economists caution that if interest rates fall and incomes rise, demand may heat up, so acting now might be wise.
Key2Dreamz advises homebuyers to seize this opportunity. With prices not far above other cities (Adelaide’s median is only ~$1.043m now), first-home buyers have a unique chance. Our experienced Melbourne buyer’s agents know the local market shifts and can guide you to the right suburbs and deals. We also have teams in other markets – for example, if you’re open to Sydney or Brisbane, our Sydney buyers agents and Brisbane specialists (see our Real Estate News) can help you compare options.
Ready to make your move? Contact Key2Dreamz today for personalised advice. Call us at +61 439 260 917 or book a free consultation with our buyer’s agency online.