(November 2025 Blog) Why now might be the right time to invest in Melbourne property

Melbourne’s current property market can be both challenging and advantageous for investors.

With low listings, surging prices and record-high rents, competition is intense for renters and homebuyers. But for investors, the outlook remains strong, with rising rents, low vacancy rates and the potential for long-term capital growth delivering solid returns.

Whether you're a first-time investor or expanding your portfolio, understanding the current landscape and making informed, strategic choices has never been more important.

Australian property investors typically have smaller portfolios

Investors remain a significant part of our property market. According to the PropTrack-Terri Scheer Investor Report 2025, about one in seven Australians owns a rental property, with that number steadily increasing.

In the late 1970s, just one in 25 Australians reported rental income on their tax return. By 2022/23, that share had more than tripled to 14.1%, reflecting the growing appeal of property as a long-term investment.

However, most investors hold relatively small portfolios. Two-thirds own just one investment property, and fewer than 4% own more than four.

Even with relatively small portfolios, Australian investors have enjoyed strong outcomes in recent years. Rapid home price growth has meant that the vast majority of investor sales have been profitable.

In Melbourne, price growth has been more moderate than in other capitals – but still, four in five investor sales over the past year turned a profit.

Melbourne’s rental market hits record high

Alongside capital growth, Melbourne’s tight rental market is another source of strength for investors.

According to Domain, the city’s rental vacancy rate sits at just 1.4%, well below the 3% considered a balanced market.

The combination of limited supply, rising working-from-home preferences and the return of migration after the pandemic has intensified demand, increased competition is fierce and has put upward pressure on rental rates. As a result, median asking rents have reached record levels: $575 a week for units (up 4.5% from last year) and $580 a week for houses (no change from last year).

This highly competitive environment is tough on renters. Many are moving into share houses or relocating to more affordable suburbs, while well-located, high-quality properties regularly attract multiple applications.

First-time investors – how to succeed in a tight rental market

For new investors, these market dynamics offer a real opportunity – but it’s critical to approach it with the right strategy.

Start with research. Look for suburbs with strong tenant demand, good public transport and proximity to amenities. Target properties that appeal to a wide range of renters – such as modern apartments or homes with multiple bedrooms – to minimise vacancy risk.

Next, plan your finances. Get pre-approved and set a realistic budget that includes both upfront and ongoing costs.

Finally, consider long-term growth potential. Suburbs with planned infrastructure upgrades or strong population growth can deliver both steady rental returns and capital appreciation over time.

Melbourne buyers grapple with low listings and surging prices

Despite the opportunities, buyers are also facing headwinds – particularly when it comes to stock levels and affordability.

SQM Research reports that listings in Melbourne fell 5.9% in the year to September 2025, reducing the number of homes available for purchase.

At the same time, stronger buyer demand – fuelled by lower interest rates – has driven prices up. According to Domain, Melbourne’s median house and unit prices both neared record highs in the September 2025 quarter. House values sit at $1,083,043 (just $10,000 below the peak), while units are at $590,597 (only $12,000 off the record).

In this environment, professional guidance can make a big difference. With low listings and rising prices, it pays to be prepared with finance, move quickly and know which areas are likely to deliver both rental yield and long-term capital growth.

A buyer’s agent can uncover off-market opportunities, negotiate in competitive conditions and help you make smart, confident decisions.

As an expert buyer’s agency, A Game Property Advisory can help you secure a quality property at a great price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.