Melbourne’s Property Market Is Building Momentum.

Rate cuts, rising prices and robust auctions: Melbourne’s property market gathers pace.

Prices are rising steadily, auction results are strengthening, buyer confidence is increasing and with May’s 0.25% interest rate cut, history tells us more positive sentiment should be on the way.

Melbourne has consistently recorded property price rises over the first four months of 2025.

According to the latest PropTrack Home Price Index, Melbourne home values rose 0.25% in April, which followed a 0.2% rise in March and a 0.7% jump in February.

It’s also worth noting Melbourne was one of just three capital cities to see more than 0.2% growth in April.

While the rises might not be spectacular, they are consistent, and that tells me the recovery is real.

With more interest rate cuts expected, a rise in investor activity, and expanded first-home buyer incentives on the horizon, the signs are pointing to further momentum in the months ahead.

Auction strength supports the recovery
The auction market is also sending a clear signal.

According to Cotality (formerly CoreLogic) Melbourne recorded a preliminary clearance rate of 73.8% for the week ending May 18, which was our second highest so far this year and well above the combined capital city average of 68.8%.

The North East (80.7%) and Inner South (80.5%) led the way, closely followed by the South East (76.8%) and Inner (72.5%) areas.

The Outer East (72.6%) and West (70%) also performed well, reinforcing that buyer demand is holding firm across a diverse mix of markets.

These results build on what we saw after February’s interest rate cut.

Back then, the weekend after the RBA dropped the cash rate by 25 basis points, Melbourne recorded 1,467 auctions and a clearance rate of 72.1% - the best since July 2024.

The momentum carried into early March, with clearance rates sitting comfortably above the 70% benchmark, which signals a balanced and healthy market.

We’re now seeing similar conditions again.

And with a second interest rate cut delivered on May 20, there’s every reason to believe more stock, more buyers and more confidence are coming.

Rate cuts boost confidence and activity
In February, when the RBA made its first cut of the year, the impact on sentiment was almost immediate.

Buy searches on realestate.com.au jumped to the highest level in three years.

Consumer confidence lifted, and home price growth ticked up.

It stands to reason that May’s rate cut will have a similar impact.

What stood out to me is that in the press conference following the RBA Board meeting, Governor Michele Bullock revealed the board had considered cutting rates by 50 basis points before deciding on the lesser 0.25% drop.

This tells us they’re serious about stimulating the economy.

With inflation easing and economic headwinds softening, the outlook for another cut in July looks strong.

We’ve seen historically that lower rates don’t just help buyers borrow more—they also help sellers feel more confident about making a move.

That’s particularly true in our markets, where many people are upgrading, downsizing or transacting within the same area.

Investor and first-home buyer activity on the rise
While interest rate cuts are one factor, another important piece of the puzzle is the rise in investor activity.

Compared to Sydney and Brisbane, Melbourne is still relatively affordable, and yields remain solid in key areas.

It’s no surprise we’re seeing more interest from interstate buyers who view Melbourne as a value play.

At the same time, national lending indicators show first-home buyer activity is starting to increase.

It’s modest so far - just 1.3% up year-on-year - but with expanded eligibility for schemes like Help to Buy and the 5% Home Guarantee coming later this year, we expect demand from first-time buyers to step up.

That gives investors a clear window of opportunity to re-enter the market before competition intensifies.

Outlook: A stronger winter ahead

Winter in Melbourne isn’t traditionally seen as a busy period for real estate but this year is already defying expectations.

Listing pipelines are building, buyer confidence is rising, and we’re hearing from across the network that June is shaping up to be one of the most active winter months we’ve seen in some time.

Cotality (formerly CoreLogic) is also forecasting a lift in auction volumes in the weeks ahead, which is another clear signal that market momentum is picking up.

With interest rates easing, more buyers returning, and sentiment improving, the path ahead looks increasingly positive.

Get in touch with the team at Woodards to discuss how we can help you maximise your property’s potential.