Is Melbourne’s Median House Price Sustainable in the Long-Term?

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melbourne median house price

As one of the most liveable cities globally, Melbourne offers a unique lifestyle that attracts people from all over the world. With a growing population and an increasing demand for housing, Melbourne’s median house prices have risen steadily over the years. However, the question on everyone’s mind is whether the median house prices in Melbourne are sustainable in the long-term.

Many factors come into play when it comes to determining house prices, including location, supply and demand, economic conditions, and interest rates. Understanding these factors is critical in evaluating the sustainability of Melbourne’s median house prices and predicting their trajectory in the future.

Population Growth and Demand for Housing

One of the primary factors contributing to the rise in Melbourne’s median house prices is the significant population growth that the city has experienced over the years. Data from the Australian Bureau of Statistics shows that Victoria’s population grew by 67,400 people in the year ending September 2020, with Melbourne accounting for the majority of this growth.

This population growth has led to an increasing demand for housing in Melbourne, which results in the limited supply of available housing stock. In such a scenario, competition among buyers increases, leading to increased pressure on house prices.

Economic Conditions and Interest Rates

Economic conditions and interest rates can also play a significant role in determining the sustainability of house prices. Low-interest rates tend to encourage more people to take out home loans, boosting demand for housing and increasing house prices. On the other hand, high-interest rates can reduce demand for housing, causing house prices to fall.

Additionally, Melbourne’s economy also plays a crucial role in the sustainability of house prices. A strong economy can create employment opportunities, leading to an increase in the number of people looking to buy a home. However, a weak economy can lead to a reduction in the number of people looking to buy a home, decreasing demand and causing house prices to fall.

Housing Supply

The supply of housing in Melbourne is another critical factor that can impact the city’s median house prices. Limited available housing stock and a growing population can put upward pressure on house prices. Additionally, the development of new neighborhoods can impact the supply of available housing stock, with more suburban developments leading to more affordable housing options compared to inner-city living.

Government Policies and Regulations

Government policies and regulations also play a role in Melbourne’s median house prices’ sustainability. Stimulus packages can encourage people to invest in housing, leading to an increase in demand and rising house prices. Policies aimed at curbing demand, such as taxes imposed on foreign investors buying houses, can also impact house prices. Strict regulations on property developers and managing supply and demand can affect house prices, reducing the risk of property bubbles that can artificially inflate house prices.

The Impact of COVID-19

The global COVID-19 pandemic has had wide-ranging impacts across various industries, with the real estate industry being no exception. COVID-19 may have impacted housing demand in Melbourne in the short term, with restrictions on movement and flattening of the economy possibly leading to lower demand for housing. However, in the long term, it may have little effect on Melbourne’s median house prices as people will continue to seek housing in the city, further driving demand up in the future.

Melbourne’s Median House Prices: The Future

Melbourne’s median house prices have been on an upward trajectory over the years, with no significant price correction or crash in the recent past. While the city’s median house prices are not immune to fluctuations, they continue to hold steady, with market analysts predicting sustained growth over the coming years.


What impact does population growth have on Melbourne’s median house prices?

Population growth can lead to an increase in demand for housing, putting upward pressure on house prices, leading to more competition among buyers.

What impact do economic conditions and interest rates have on Melbourne’s median house prices?

Economic conditions and interest rates can cause fluctuations in demand for housing, which can impact house prices. Low-interest rates and strong economic conditions can lead to an increase in demand, leading to rising house prices.

What role do government policies and regulations play in Melbourne’s median house prices?

Government policies and regulations can impact the demand and supply of housing, influencing house prices. Policies aimed at curbing demand can reduce competition among buyers and bring house prices down.

What impact has COVID-19 had on Melbourne’s median house prices?

The impacts of COVID-19 have been short-term in nature, with restrictions on movement and the economy flattening affecting demand for housing. The long-term effect is minimal, and Melbourne’s median house prices are predicted to keep rising in the future.

Where can I find more information on buying a house in Melbourne?

You can check out our Guide to Buying a House in Melbourne.


While the sustainability of Melbourne’s median house prices in the long-term depends on various factors, including population growth and demand for housing, economic conditions, supply and demand, government policies and regulations, and the impact of COVID-19, Melbourne’s median house prices continue to exhibit steady growth. Positive market outlooks and forecasts predict continued growth, highlighting the need for better planning in housing development to balance buyer demand with supply and reduce the risk of artificially inflated property bubbles.

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