Why Melbourne’s Median House Price is Higher than Australia’s Average

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melbourne median house price

Melbourne’s median house price is significantly higher than Australia’s average house price. The difference can be attributed to several factors, including location, demand, and housing supply. Melbourne is a desirable city with a high demand for housing, which has led to an increase in property prices. In this article, we will explore the reasons why Melbourne’s median house price is higher than Australia’s average and the implications of this trend.

Melbourne has consistently been ranked as one of the world’s most livable cities. It is known for its vibrant culture, excellent public transportation, and diverse range of dining options. Melbourne also has a growing economy, which attracts people from all over the world, including international students, businesspeople, and migrants. These factors have contributed to Melbourne’s high demand for housing, which subsequently drives up property prices.


The location is one of the most critical factors that determine the price of a property. Melbourne is the capital city of Victoria, the second-smallest state in Australia. The city has a population of over five million people, making it the country’s second-most populous city after Sydney. The high demand for housing in this densely populated city has taken a toll on property prices. The areas closest to the city center or CBD are the most expensive. The cost of living in the city center is higher than the suburbs. Thus, the proximity to the Melbourne CBD is a relevant factor in the high median house price.


Melbourne is one of the most livable cities globally, attracting tourists, students, and workers from around the world. The city is well-connected, with multiple transport options, including trams, trains, and buses, making it an easily accessible city. The city also has world-class universities, which attract many international students. The high population density and the influx of newcomers have contributed to a high demand for housing. The increased demand for homes, particularly in the vicinity of the city center, has led to a surge in property prices.

Housing Supply

Another factor that affects property prices is the housing supply. The demand for housing in Melbourne far outweighs the supply of housing, driving up property prices. The construction of new homes and apartments has not kept up with the rising demand, leading to an increase in property prices. The limited supply of land in the city center and a lack of available land for development have also contributed to the housing supply shortfall.


The high median house price in Melbourne has made it challenging for first home buyers to enter the market. It has become increasingly difficult for the average Australian to buy a home in the city. Mortgage stress levels have also been on the rise in recent years, as more homebuyers take out larger mortgages to afford property in Melbourne. These affordability pressures further reduce the number of potential buyers, thus affecting demand and market competitiveness.

Foreign Investment

Foreign investment has also impacted property prices in Melbourne. The Australian government allows foreign investors to purchase property in the country. However, foreign investment can lead to higher prices as foreign buyers are often willing to pay more than local buyers. This dynamic has led to concern about foreign investment driving prices up and making it harder for Australians to enter the property market. Nonetheless, foreign investment is vital in building new apartments, creating jobs, and increasing the supply of housing in Melbourne.

Rental Yield

The high property prices in Melbourne may not make it favorable for investors. However, Melbourne’s rental yield is consistently higher than other Australian cities. Renting a home in Melbourne can be a better financial decision than buying, especially for younger Australians who are not yet ready to settle down. Property prices may be high in Melbourne, but rental demand remains stable, which means investors can expect to earn a higher return on their investment.


Melbourne has a well-developed infrastructure that makes it an attractive place to live, work and invest in. The city boasts excellent public transport and is home to major freeways, making it easy to access the city center from the suburbs. This infrastructure development has encouraged people to move to Melbourne, driving demand for housing and pushing up property prices.

Property Markets Across Australia

The Australian property market is diverse, and property prices vary across the country. Some cities, such as Sydney and Melbourne, have much higher median house prices than others. For example, the median house price in Sydney is AUD 895,933, while in Melbourne, it is AUD 717,105. Other cities such as Adelaide and Brisbane have a more moderate median house price. Homebuyers looking for affordable housing may choose to buy in other parts of Australia outside Melbourne.


Melbourne’s median house price is higher than the national average due to factors such as location, demand, housing supply, foreign investment, and infrastructure. While high property prices present a challenge for first home buyers, rental yield in the city remains stable. The Australian property market is large and diverse, and homebuyers can choose to buy in other cities for a lower median house price. If you are considering buying a house in Melbourne, Maz Real Estate has developed a comprehensive guide to buying a house in Melbourne. This guide contains essential information and tips to make your home buying journey smooth and effortless. Check it out here, Guide to Buying a House in Melbourne.


Why is Melbourne’s median house price higher than the national average?

Melbourne’s median house price is higher than the national average due to several factors, including location, demand, housing supply, foreign investment, and infrastructure. For example, the city’s proximity to the CBD and its status as one of the world’s most livable cities make it a desirable location. High demand for housing and limited land availability have led to high property prices.

Is it affordable to buy a house in Melbourne?

Melbourne’s high median house price has made it difficult for first home buyers to enter the property market. However, Melbourne’s rental yield is consistently higher than other Australian cities, making renting a home more financially accessible. For investors, Melbourne’s rental yield presents an opportunity to earn higher returns on investment. Nonetheless, prices may be a barrier for aspiring first home buyers.

Are property prices in Melbourne expected to rise?

Melbourne’s property prices have been rising steadily in recent years. However, the COVID-19 pandemic caused a brief dip in property prices in 2020. While the market is still recovering, property prices are expected to rise over time. Considering the city’s continued growth and economic development, the upward trend in property prices is expected to continue.

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