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Australia’s housing market is gearing up for another year of growth, with the country’s biggest real estate markets – Melbourne – set to lead the way.
In Melbourne, Domain says house prices are also forecast to reach record highs, while unit prices are projected to partially recover, remaining 3% below their historical peak.
“Lower interest rates, cheaper borrowing, and targeted support for first-home buyers will keep prices rising, especially in Sydney and Melbourne, which are most sensitive to rate changes,” says Dr Nicola Powell, Domain’s Chief of Research and Economics.
Domain predicts house price growth in Melbourne will accelerate over the second half of 2025 and reach a record median of $1.11m by the end of June next year.
Dr Powell says the expected growth of 6% or $66,000 in Melbourne would mark a full recovery from the city’s previous downturn in values during the years 2022–24.
The Domain Home Price Forecast Report also says that Melbourne’s unit prices are anticipated to rise due to lower interest rates and relative levels of affordability.
Nicola Powell says Melbourne’s median unit price is forecast to reach $584k by the end of 2025.
However, that’s still 3% below the Melbourne market’s 2021 unit price peak.
Prestige middle suburbs with leafy streets, good schools nearby and a strong community feel have boosted demand in Melbourne’s property market, helping these areas outperform many inner-city neighbourhoods in price growth.
Among Melbourne suburbs that have a median house price above $2 million, Balwyn North recorded the highest growth in median house price across a five-year period to the end of March.
It climbed 26.4 per cent to reach a median of $2.25m, according to Domain data.
It was followed closely by neighbouring Surrey Hills, which grew 26.3 per cent to a median of $2.195m. Rounding out the top five were Eaglemont (24.5 per cent), Hampton (24.4 per cent) and Black Rock (23.8 per cent).