Melbourne Property Market After the Rate Rise
Following yesterday’s interest rate rise, I wanted to share a clear, data‑driven update on where the Melbourne property market is really sitting.
The Reserve Bank has now lifted the cash rate to 4.35%, which has taken most variable home loan rates into the high‑6% to low‑7% range.
In practical terms: A $600,000 mortgage is now costing approximately $3,900–$4,100 per month. A $1.5 million mortgage is closer to $9,700–$10,200 per month.
This has absolutely made buyers more considered, but it has not removed them from the market. According to Domain Research, Melbourne is currently experiencing a two‑speed market:
Buyer demand remains strongest in well-located, well-presented homes priced at fair market value. More affordable segments continue to outperform higher-priced stock. Properties priced correctly are selling faster, even in a higher-rate environment.
Domain data also shows that listing levels remain below long‑term averages, and buyer searches continue to outpace available supply, particularly in established inner‑city and lifestyle suburbs. In short, demand still exceeds quality stock.
We are seeing this play out on the ground. A perfect example is 1/47–49 Caroline Street, South Yarra, which we launched last week. With accurate pricing and clear positioning, we saw 18 buyer groups through the property, demonstrating there is still strong desire to purchase quality homes at the right price point.
Where conditions are flatter is in homes requiring significant renovation or major upgrades. Buyers are far more cautious here, largely due to the continued rise in construction and building material costs, making renovation budgets harder to justify.
On the supply side, Domain continues to highlight tight rental conditions and low vacancy rates, reinforcing why many investors, particularly interstate investors, are returning to Melbourne. Notably, these buyers are not being deterred by interest rate rises, instead focusing on long‑term value and relative affordability compared to other capital cities.
It’s also important to remember the broader cycle. The $2 million‑plus market has seen substantial growth over the past six years, followed by further uplift during interest rate cuts last year. With rates now moving higher again, Domain data is showing that this premium segment is coming off the boil, creating more balanced conditions rather than sharp price declines.
The takeaway is clear: It’s a great time to buy, space to negotiate, and less emotional competition. It’s also a strong time to sell, provided pricing is accurate and strategy is sound.
As always, if you’d like to discuss how these conditions relate specifically to your property or plans, please feel free to reach out. I’m always happy to provide tailored advice.
Feel free click on the link below to schedule in a time to speak.
Kind regards,
Dion Besser
0412 556 443
dion@besserco.com.au
