How Rising Inflation in 2025 Is Shaping Melbourne’s Property Market

A quick update from the market this week, a few headline numbers, what they mean for rates, and what we’re
seeing on the ground.

First up, the new inflation numbers landed and they matter. The ABS’s first full monthly CPI shows inflation rose
3.8% year-on-year to October 2025, with the trimmed-mean (the RBA’s preferred core measure) at 3.3%.
That uptick has pushed market pricing around rate cuts back a bit, expectations for an immediate cut have
softened because inflation proved stickier than many hoped.

What does that mean for interest rates? For now the RBA is playing it cautious. The recent pattern, cuts earlier in
the year, then a hold, looks set to continue until inflation is clearly and sustainably below target. Some market
commentators are now suggesting rate cuts may be delayed into 2026, and a handful are even talking about the
RBA having to reassess policy if inflation stays elevated.

In short: cuts are still possible, but the timing is now more uncertain and very data-dependent.

Despite that uncertainty, buyer demand in Melbourne remains real. Clearance rates have stayed healthy in
recent weeks and we’re still seeing serious buyers stepping up for well-presented homes. That was on full
display at Besser+Co. over the weekend, 5 Mitchell Road, Caulfield North, a two-bedroom semi-detached home,
attracted four bidders and sold under the hammer for $1,311,000. That result is a reminder that quality, presentation and location still command competition.

We also had a great conversation this week on Beyond the Deal with Illan Samuel from Samuel Property. Illan
gave a frank, boots-on-the-ground view of what’s happening in Melbourne development space right now, and
where he sees inner-city development heading into 2026. If you’re watching the apartment and multi-res market,
it’s well worth a watch by clicking below.

So where does that leave us? The broad picture is unchanged: demand is there, supply is tight in many suburbs,
and price momentum will be driven by whatever the RBA does next. If inflation continues to show resilience, rate
cuts may be pushed back, which gives buyers more time to prepare, but it may delay some of the market’s
acceleration. If inflation softens, cuts could resume and activity would likely quicken.

If you’re thinking of buying, selling or investing, now’s a smart time to get your plan in place, speak to your
broker, tidy the presentation, and be ready to move when the data and the RBA give the market its next signal.
Call me or click on the link below to schedule in a time to speak.