Melbourne auction

Melbourne’s property market has been undergoing a rapid shift, and the latest data shows that homebuyer demand has moved from the city’s most affordable suburbs to its more affluent areas. With a recent interest rate cut boosting confidence, buyers are now looking to high-end suburbs where property values have surged.

The impact of interest rate cutssurge in demand for affluent suburbs.

February’s market data from CoreLogic reveals that Melbourne’s wealthier areas saw some of the highest growth in property values:

Stonnington (western region) – up 2.1%

Port Phillip – up 1.8%

Brunswick-Coburg – up 2.1%

According to CoreLogic research director Tim Lawless, high-end markets tend to be the first to respond to interest rate cuts. “Markets around the inner east, the Bayside, and the Mornington Peninsula have historically reacted the fastest when borrowing conditions improve,” he explains.

Affordability constraints previously pushed buyers toward cheaper areas, but renewed confidence is bringing them back to the premium markets.

Meanwhile, Melbourne’s more affordable suburbs have also seen steady price growth over the past year, led by:

Tullamarine to Broadmeadowsup 1%

Casey Northup 0.5%

Casey Southup 0.2%

However, experts suggest that lower-priced markets may take longer to respond to further rate cuts due to cost-of-living pressures.

What this means for buyers and sellers.

The shift in demand has important implications for both buyers and sellers:

For buyers: With borrowing power increasing and confidence returning, those looking to enter Melbourne’s prestige market may need to act quickly before prices rise further.

For sellers: If you own property in an in-demand suburb, the conditions are becoming more favourable. High clearance rates and multiple bidders at auctions suggest strong competition among buyers.

In some high-end markets, buyer interest has surged by 30-40% over the past few months, particularly for properties in the $3 million to $10 million range. While last year saw a disconnect between buyer expectations and seller price points, that gap has now narrowed, leading to smoother transactions. Buyers who were previously hesitant are now stepping forward with more confidence, making stronger offers.

Auction clearance rates have also improved, with Melbourne achieving a preliminary rate of over 70% for five consecutive weeks.

(Source: CoreLogic)

Affordable suburbs still in demand.

While luxury markets are bouncing back, Melbourne’s affordable suburbs remain highly attractive, particularly for interstate buyers. Some of the city’s most budget-friendly areas continue to offer strong value, with houses in Broadmeadows still available for $500,000 to $600,000—a fraction of the price of comparable homes in Sydney. Strong infrastructure, accessibility, and lifestyle benefits make these locations appealing for both investors and first-home buyers.

What’s next for Melbourne’s property market?

With further interest rate cuts expected this year, many analysts predict continued price growth across Melbourne. Commonwealth Bank’s head of Australian economics, Gareth Aird, anticipates up to 75 basis points in cuts, with the next reduction potentially arriving in May. “As rates come down, borrowing power increases, which lifts buyer confidence,” he says.

Whether you’re buying or selling, staying ahead of these trends is key to making informed property decisions.

Thinking of making your next move? Get in touch with the SHAPE team today to explore your options in Melbourne’s evolving market.