Melbourne – Australia’s biggest city by total population, a cultural and economic hub, and one of the most liveable cities in the world.

There are dozens of reasons to be attracted to Melbourne as a property investor, and these are just a few of them.

But in the past few months, Melbourne’s property market hasn’t been as strong as some of the other capitals, like Perth or Brisbane. So, what next?

Sadly, there’s no crystal ball when it comes to investing. But experts can make educated guesses as to how the property market will perform in the future. Let’s run through your Melbourne property market forecast, outlined by the experts at Patrick Leo property consultants:

A slow 12 months…

Reports and studies are increasingly showing that the next 12 months in Melbourne will be characterised by a subdued property market. Oxford Economics Australia forecasts that in the next year, Melbourne median house prices will rise just 0.7%. This is due to decreased clearance rates (from 77.7% in May 2023, to 65% in March 2024) and a surge of investors selling up due to increased state government and land taxes.

A 5.5% increase by 2026?

But things aren’t predicted to stay that way for long. Oxford Economics Australia is also forecasting a massive 5.5% increase in Melbourne’s property market by mid-2026, despite increased state government and land taxes. This is expected to be propped up by interstate and overseas migration, creating extra demand for properties across Melbourne. This will see median house prices surge from $1.04 million to $1.157 million in the space of two years.

 It’s good news for investors who are attracted to the stability of the Melbourne market and are looking for a long-term investment plan.

Air-tight rental market

Right now, all of Australia’s capital cities are experiencing super tight rental markets, with Melbourne being no exception. There’s a soaring demand for rental properties across Melbourne, and a severe undersupply of housing. This had led vacancy rates in Melbourne to reach historical lows of 1.5% - for reference, a balanced market is around 2-2.5% vacancy rate.

Units to outperform houses

Oxford Economics is also predicting units to outperform houses – not just in Melbourne, but across the country. As houses become more and more expensive, this will price buyers out of the housing market and into the unit market instead. Existing unit prices are also expected to be pulled up by the significantly increased costs of building new apartments.

As investors, it’s equally important to look at the past as it is the future. Melbourne’s property market has never taken a dramatic hit – it has only seen a steady and consistent increase in prices. Patrick Leo can help you invest in Melbourne, finding the right property to achieve your financial goals. Our leading team of property advisers are committed to helping you on your path to abundant wealth, having helped hundreds of clients achieve the same. Get in touch with our team and get started today.