Melbourne Property Market in 2025: Opportunities and Trends Coexist Investment and Living Prospects in Gentrifying Suburbs, Townhouses, and Quality Apartments

Investment and Living Prospects in Gentrifying Suburbs, Townhouses, and Quality Apartments

In 2025, Melbourne’s property market is showcasing a unique landscape, offering families and investors diverse opportunities. Let’s explore the key trends and promising areas.

Family-Friendly Homes: The Rise of Gentrifying Suburbs

Existing homes in Melbourne’s gentrifying suburbs are seeing steady price growth. According to property data, prices in these areas have risen by around 8% over the past year. Demand for spacious homes and amenities, combined with domestic and international migration, is driving population growth and sustaining popularity for these suburbs.

3-4 bedroom houses with larger land sizes are particularly appealing to families, offering renovation potential and long-term value growth. Middle-ring eastern suburbs like Mount Waverley, Glen Waverley, Mitcham, Blackburn, and Ringwood are undergoing gentrification and infrastructure upgrades. These areas balance affordability with proximity to the city, attracting strong demand. For example, Mount Waverley’s median house price is approximately $1.2 million AUD, up 10% year-on-year.

In the inner west, suburbs like Essendon and Moonee Ponds are popular among families and professionals due to their CBD proximity, top schools, and lifestyle amenities. Essendon’s median house price is around $1.05 million AUD, with a 7% annual increase.

2. Townhouses and Villa Units: Favorites for Young Families and Investors

Townhouses are increasingly popular as a middle ground between apartments and detached homes. Affordability pressures are pushing buyers and renters toward these cost-effective options.

Middle-ring suburbs with rising density and gentrification, such as Bentleigh and McKinnon (southeast), Reservoir and Preston (north), and Mount Waverley (east), offer strong investment potential. Bentleigh’s median townhouse price is about $950,000 AUD, up 9% annually. Villa units, appealing to young families and downsizers, are also rising in value. Reservoir’s villa unit median price is around $850,000 AUD, up 8% year-on-year.

3. Quality Apartments in Prime Locations: A Renewed Focus

Well-located, family-friendly two-bedroom apartments are regaining attention, especially in high-demand rental areas. Young professionals, students, and downsizers are drawn to low-rise boutique developments with modern designs, spacious layouts, and access to amenities like cafes, parks, and public transport.

For instance, in South Melbourne, rental yields for such apartments reach 5-6%, attracting investors.

4. Market Outlook and Current Conditions

Melbourne’s property market is uneven: high-quality “A-grade” homes are in high demand, while “B-grade” properties take longer to sell, and “C-grade” options are often avoided. This creates opportunities for strategic buyers.

While some buyers and sellers remain cautious, a rebound is expected as interest rates stabilize and inflation eases. The rental market remains tight, with a vacancy rate of just 1.5% (below the 2-2.5% equilibrium), driven by population growth and a strong economy. Rents continue to climb, reflecting sustained demand.

Conclusion

In 2025, Melbourne’s property market offers rich opportunities for families and investors. Gentrifying suburbs, townhouses, villa units, and well-located apartments each hold unique potential. Understanding local trends and priorities will help buyers and investors make informed decisions.