Act Fast: Melbourne’s Property Prices Are Set to Rise – Here’s What You Need to Know.

The property market is always evolving and making informed decisions is crucial when it comes to buying a home or investment property. Recent forecasts from KPMG indicate that Melbourne’s unit prices are set to rise steadily over the next two years, making now a strategic time to enter the market before competition intensifies.

Melbourne’s Property Market: What’s Ahead?

KPMG’s latest Residential Property Market Outlook predicts Melbourne’s unit prices will increase by 4.7% in 2025 and surge to 7.1% in 2026. This steady growth reflects a broader shift in affordability and demand, with more buyers turning to apartments and townhouses as an accessible entry into the housing market.

The forecasted growth isn't surprising. With detached housing prices continuing to rise, many first-home buyers, investors and downsizers are finding that well-designed, centrally located apartments offer both lifestyle and financial benefits. The expectation is that as affordability constraints persist, unit demand will further strengthen, driving prices upward.

Interest Rates and Inflation: A Window of Opportunity

While 2024 was a year of high interest rates and economic uncertainty, the landscape is shifting. Inflation has now dropped to a three-year low of 2.4% and interest rate cuts are expected to commence later this year as economic conditions stabilise. Once these cuts begin, buyer confidence is likely to surge, bringing more competition into the market.

The time between now and when interest rates start to decline represents a prime opportunity for buyers to secure property at today’s prices before the anticipated rush. As seen in previous market cycles, once confidence returns, fear of missing out (FOMO) can drive prices even higher, creating a more competitive environment for those still looking to buy.

Limited Supply, Growing Demand

Despite an increase in building approvals, there remains a lag between approvals and actual housing completions. This means that even as supply attempts to catch up, demand is expected to outpace availability over the next two years. With Melbourne’s population growth and a continued shortage of affordable housing options, unit prices are positioned for sustained appreciation.

A Smart Move for Investors and Owner-Occupiers

For those looking to invest, Melbourne’s unit market presents an appealing proposition. Rental demand remains high and KPMG expects annual rent growth of 3.5–4.5% over the next two years, underpinned by tight vacancy rates. Buying now allows investors to capitalise on strong rental returns while securing a property at today’s lower price point before value appreciation accelerates.

Owner-occupiers can also benefit from acting now. By purchasing off-the-plan, buyers often secure a better deal, with the current stamp duty savings on offer for all buyers. Additionally, buying earlier means locking in a price before the expected market shift, ensuring long-term capital growth.

Seizing the Moment

The key takeaway? Melbourne’s unit prices are set to rise steadily and economic conditions are aligning to create a favourable buying environment. With affordability pressures driving demand for apartments and interest rates poised to decrease, waiting could mean paying more and facing greater competition in the near future.

For those considering an off-the-plan purchase, now is the time to explore options before the market moves into its next phase of growth. Whether you're looking for a new home or an investment opportunity, acting ahead of the curve ensures you're well-positioned to reap the rewards of Melbourne’s evolving property market.

If you're ready to take the next step, reach out to explore the opportunities available today. Your future self will thank you.

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