Melbourne Property Boom: First Home Buyer Scheme, Rate Cuts & Suburb Growth

Melbourne’s property market is heating up again — and the signs are impossible to miss. In this episode, we unpack how rising First Home Buyer caps, ongoing RBA rate cuts, and record-low housing supply are reshaping demand across key suburbs. With vacancy rates near 1.8% and rents climbing fast, investors face the classic balance between yield and long-term capital growth.

We break down current Melbourne housing data, from SQM rental trends and vendor discounts to the renewed momentum in listings that previously struggled to sell. Plus, discover why Melbourne’s strong economy — spanning education, healthcare, tech, finance, and professional services — is underpinning resilient property demand.

With three rate cuts already this year and more likely ahead, holding costs are falling and buyer competition is returning. We share a clear investor playbook: finance prep, suburb analysis, disciplined bidding, and data-driven decision-making.

If you’re considering when to buy, hold, or wait — this episode gives you the insights, context, and confidence to act strategically in Melbourne’s 2025 property market.

Chapters

• 0:00 Why Melbourne And What’s Changed
• 0:10 First Home Buyer Scheme Fallout
• 1:05 Rents Rising And Vacancy At 1.8%
• 2:35 Yield Trade‑Offs In Melbourne
• 2:35 Low Listings And Shifting Demand
• 3:35 Economic Momentum And Undersupply
• 5:05 Diversified Economy, Lower Risk
• 5:45 Rate Cuts And The New Growth Cycle
• 6:40 Final Takeaways And How To Work With Us

Transcript

SPEAKER_00: 0:00

Why the Melbourne property market in 2025 and beyond? My name is Casey Taylor, and I'm the host of the Tailored Property Wealth podcast. And let's get into it today. First home buy scheme. This is sending everyone fucking crazy at the moment. We are seeing some ridiculous, ridiculous numbers just for property now, and it hasn't even, well, it's now in place. But for the last month, there has been a lot of FOMO. There's been people rushing in and paying overs on property to get in before this scheme takes place. Now Melbourne is benefiting from this because the cap is increasing from 800,000 to 950,000. And as we just discussed with that median value across the board, we've got a median value of 803,000. So it's going to jump massively. It's going to be across a lot of different areas that that cap is going to benefit from. All right. So that is a positive one. And that that's across the board, right? It's not just selective to Melbourne, but it's going to have a positive effect. We are going to look next at rental income and vacancy rates of Melbourne. So the rental income over the last 12 months has increased. It's up 3.3% as per SQM research. Now on the flip side of that, we can look at vacancy rates, and vacancy rates are currently sitting at 1.8%. So it's not as tightly held as some of the other metros. However, it it has corrected a lot since COVID. It's jumped up a little bit and it's dropped again. I anticipate to see this probably drop a little bit over the next couple of years. But that rental income growth is there. And once the economy is thriving again, there is going to be that pressure there once we see those vacancy rates drop as well. But it's still, don't get me wrong, a tightly held market. 1.8% vacancy is still low. Okay. So we know we're going to get rental income growth. And that is one con of Melbourne that you have to understand going into that marketplace is yields are not as strong as some of those other metros, for example, your Brisbane. So your yield is going to be a little bit lower on the front end. That's something you just have to factor in. All right. Sometimes it might be adding a bit of value to boost that yield up. However, it's just part of the parcel with Melbourne. Listing levels. Listing levels, I said this in a previous episode on why the Brisbane property market, you can check that one out. However, listing levels are low across the board in Melbourne over the last 12 months in just a couple of suburbs that I've taken a look at. They're 27% lower and 33% lower. So far less stock on market. And we actually, some of the properties that have been transacting recently were listed last year and didn't sell because the marketplace was a completely different environment then. However, now things have changed. They are selling and we can see those listing levels right now are a lot lower than they were last year as well. And that's because that demand is starting to absorb some of that stock as well. Medium vendor discount in a number of suburbs is starting to decrease. It's only a couple of days roughly at the moment, some of the suburbs that I did look at, but we are seeing that trend down. State of the state report, which I think this one's interesting knowing what I've just discussed and what Melbourne's done over the last five years, the economy was torn to pieces essentially. Melbourne is now ranked four in the state, fourth, I should say, in the state of the state for July. And it's actually ranked third on the economic growth. So it's seeing that bounce back. There's an undersupply of new housing and building approvals. This one's across the board, but it is also for Melbourne. If we can get into those established areas, we know that that land's scarce. We know there's going to be that pressure. We only ever purchased established property in established areas. Melbourne's got a really diverse economy. And this is why we always like metro locations as well. Not just for a capital growth perspective, but for lowering your risk. So you're not going to a smaller regional where they might be more reliant on one industry. If we can go and get into a diverse economy, which is those metro locations, and they have that diverse economy, it just lowers our risk as an investor. There's less corrections. But that's something I always like to factor. Now they're strong in education, healthcare, finance, tech, professional services. So there is a range there. Interest rate reduction cycle. And I think this has really helped Melbourne shift. It started to shift around February, where we started to see that growth take place in Melbourne. You can see, you can see on some charts, and I'll probably do some short reels on this in the future on a couple of suburbs in Melbourne where they're kind of tanked out. They're at the bottom and they're starting their growth cycle now. The rate cuts have really started to positively influence that. People, their holding costs have improved. They can borrow when maybe they couldn't, or they're just taking action now because of those holding costs. I think that has benefited the Melbourne property market. Three rate cuts we've had for 2025. The RBA just held yesterday on the last day of September. However, we do see, expect to see another couple of rate reductions over the next six months, let's call it the big four, still predicting a couple of rate cuts. That's it for today on why we like the Melbourne property market now, the back end of 2025, why we're investing in the Melbourne property market now, and why we think it's going to perform well in the future. If you want help in purchasing your next property, if you want to make sure you get that right, you build the wealth, you can create equity to leverage into another property and really build a portfolio to get you to financial freedom, reach out. We can book in a discovery call and see if you might be one of the clients that we choose to work with each month. Our spots are limited. We do not work with everyone, and we want to work with people who share the same values as us but operate well. We do not chase clients. If your communication is not there, you might not be the right fit for our business. So reach out, we can book in a call and go from there. I hope you have a fantastic day, and we'll see you on the next episode.