Melbourne tipped as a hotspot for 2025 despite poor performance

Despite Melbourne’s property market falling in price throughout 2024, a new report predicts the city will become a prime investment location.

Hotspotting by Ryder Property Research predicts Melbourne will rebound in 2025, according to its Top 10 National Best Buys report which evaluates regions based on their infrastructure, employment, urban renewal, lifestyle, and migration factors.

“Melbourne faced challenges in 2023 and 2024, but it’s poised for a comeback next year,” says Hotspotting director Terry Ryder.

“Its price gap with Sydney and high population growth, despite high state taxes and ongoing governance issues, make it an attractive prospect,” he says.

Melbourne’s median house price is expected to grow by 3 per cent to 5 per cent and begin to play catch up, says Domain chief of research and economics Dr Nicola Powell.

“When we do get to the next property price cycle, we’re likely to see Melbourne overperform relative to other capital cities because it will go through this kind of catch-up growth phase,” she says.

“There are buyers in Melbourne at the moment who are seeing this opportunity to purchase because of that value that’s been building up over time.

“What will spark the massive return of investors for Melbourne is when we start to see better [property price] growth prospects. And those growth prospects aren’t quite there yet.”

Private Sale: $850,000 - $900,000

3/104 Barkly Street, St Kilda VIC 3182

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The report names the key investor hotspots in Victoria as the metro and southeast regions. This growth potential is primarily due to the increasing affordability of units and houses, says Hotspotting general manager Tim Graham.

“Demand for well-located attached dwellings in Melbourne is rising, driving rent growth, price increases, and new dwelling approvals,” says Graham.

“The City of Casey continues to be a strong market with steady long-term growth and appeal for first-home buyers.”

$410,000

1812/3 Yarra Street, South Yarra VIC 3141

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Melbourne is not the only investor hotspot for 2025. The Hotspotting report also predicts Darwin will become a significant investment location in the new year due to its more affordable properties and high rental yields.

“Darwin’s property market is experiencing a resurgence, particularly in suburbs like Zuccoli, Gunn, Bellamack, Durack, and Woodroffe,” says Ryder.

The Hotspotting 2025 best buys list includes:

• Victoria: City of Melbourne, City of Casey, City of Ballarat, Albury/Wodonga
• New South Wales: City of Sydney, Tamworth, Albury/Wodonga
• Queensland: Sunshine Coast, Redland City
• Northern Territory: Darwin
• Tasmania: Launceston