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Headlines
Summer 25/26
Melbourne Residential
Economy Key drivers
Residential sales Update
Melbourne residential sale transactions tallied to 25,345 in the third quarter of 2025, down 6% from the previous quarter In the past year, the total number was 3% lower, reaching 108,530 sales This was shaped by restrictive lending conditions and an overall lower number of properties listed for sale on the market As a benchmark over the past five years, the quarter tally averaged 26,989 sales and annually, this average was 110,505 sales
Auctions
In the last week of September 2025, only 224 residential auctions were held across Melbourne given it was the AFL Grand Final long weekend According to Cotality, 64 3% of the homes were sold under the hammer. Clearance rates above 70% suggest strong demand and a seller’s market, while a rate below 60% indicates weaker demand and a buyer’s market This result was lower than 68 2% one quarter ago when 962 auctions were held By comparison, the same quarter last year saw 57.0% homes sold, from 236 auctions.
Tracking the total number of sales each quarter
Melbourne
Auction clearance rate
Melbourne
Duration +7 days
Melbourne homes averaged 71 days on market in Q3 2025, from the time they were listed to the day they went under contract This average duration was also 71 days (+0 days) the quarter before but 64 days (+7 days) one year ago A lower number of days on market tends to mean homes are selling faster with more desirable properties, while a higher number of days suggests a slower market with above market values. Looking back over the five-year average, it has taken 67 days to sell a home
Tracking average days on the market
Newly advertised property listings in Melbourne were 2 3% lower in the month of September 2025 than the equivalent period last year, according to Cotality This change trended above the Australian average of -10.3% and above the -11 2% across Australian capital cities
Melbourne’s total number of listings in the month of September 2025 were 15.4% below the equivalent period last year, according to Cotality By comparison, the Australian average change for total listings was -13.3% and across Australian capital cities was -13 6%
Residential property prices across Melbourne rose by 5 8% in the year ending Q3 2025, with a 2 1% increase recorded in the most recent quarter This brought the median residential value to $926,000, reflecting a steady upward trajectory in housing demand and underlying resilience in the market. Annual residential price growth has averaged 3 6% over the past five years.
Tracking median prices
Looking ahead, McGrath Research forecasts Melbourne residential property prices to increase by 5% by the end of 2025, followed by a 7% rise in 2026. These projections reflect a mix of ongoing demand from limited housing supply, a lowered number of sales transactions and attractive relative value compared to other major Australian cities for investors and first time buyers
Forecast for median prices
Residential rents Update
Melbourne residential rental vacancy was recorded at 2 5% in Q3 2025, remaining stable in the quarter but 20 bps higher over the past year according to REIA Generally, around 3% vacancy is considered a balanced market between rental supply and demand Below this equilibrium is considered to be an undersupplied pool of rental homes. Over the past five years, rental vacancy has averaged 3 2% per year
Residential gross rental yields rose 1 bp in the Q3 2025 quarter to be 4 45% across Melbourne, whilst being 18 bps more than a year ago. Gross rental yields are a good initial measure of comparing the return of a property investment before expenses are deducted. A yield greater than 4% tends to be considered most desirable for properties located in capital cities, while below this, tends to indicate high property prices relative to rent, or low rental demand Gross rental yields have averaged 3 73% over the past five years
Tracking gross rental yield
Residential rents
Melbourne residential rents remained stable in Q3 2025, after increasing 1 8% over the past year, to stand at $580 per week Low vacancy and high migration have kept rents elevated, albeit now rising at a slower pace than previous years On average, over the past five years, rents grew 6 7% per year.
Tracking median weekly rents
Whilst Melbourne continues to experience low stable vacancy and a steady delivery of new homes, McGrath Research forecast sustained upward pressure on rents of 2% at the end of 2025, with a further 3% rental growth likely in 2026.
Forecast for median rents
Melbourne Melbourne refers to the Greater Capital City Statistical Area or ‘Greater Melbourne’ as defined by the Australian Bureau of Statistics.
Guiding you home
www.mcgrath.com.au/research
