Big Bank’s Bold Price Growth Call - Melbourne’s Ready to Shine
In This Week’s How's The Market | Edition 125
Big Bank’s Bold Price Growth Call - Melbourne’s Ready to Shine
Toorak’s Premier Boulevard
Borrowers get $155 a month relief in RBA rate cut
Big Bank’s Bold Price Growth Call - Melbourne’s Ready to Shine
We often talk about how interest rates shape buyer confidence, but right now, the connection is crystal clear and it’s sending shockwaves through the property market.
This week, ANZ dropped a headline-grabbing forecast that could reshape buyer and seller expectations over the next 18 months. Melbourne, in particular, looks set for a dramatic turnaround.
Why This Forecast Matters More Than Ever
In its freshly released Australian Housing Outlook report, ANZ now predicts combined capital city home prices will surge 5% by the end of 2025 and a further 5.8% by the end of 2026.
That’s a huge leap from their February forecast of just 0.9% growth this year and 3.8% next year.
What’s driving this upgrade? Three Reserve Bank interest rate cuts in February, May, and August are supercharging borrowing capacity. ANZ senior economist Adelaide Timbrell puts it simply:
“Rate cuts are bringing borrowing capacity up, which allows people to bid more on homes at auctions or in other competitive circumstances.”
History backs her up. Since 1996, every time a rate-cutting cycle started, capital city prices jumped an average 6.1% in the first year. With another cut likely in November, momentum could accelerate further.
Melbourne’s Market Momentum: Modest Now, Massive Tomorrow
CoreLogic’s latest data shows Melbourne’s median home value rose 0.4% last month and 4.5% over the past year just shy of the national average increase of 0.5%. Units have lagged slightly with a 0.3% monthly rise but a 0.6% yearly decline.
However, analysts are now raising their Melbourne growth forecasts: 6% for 2025 and 4% for 2026 an upward revision fueled by strong labour markets and healthy disposable incomes.
Auction Action Tells the Tale
Melbourne’s auction clearance rates tell an encouraging story too.
For the week ending August 3, 2025, the clearance rate was a steady 52.6% from 795 scheduled auctions according to SQM. By August 10, that jumped to an impressive 70.9% clearance from 742 auctions, a clear signal that buyer confidence is waking up.
Interest Rate Cut: Game-Changer for Buyers and Sellers
On August 12, the Reserve Bank slashed the official cash rate by 0.25% to 3.6%, marking the third cut this year. Big banks like Commonwealth Bank and Westpac are passing on the full cut to borrowers.
What does this mean? Lower monthly mortgage repayments for example, a borrower with a $700,000 mortgage could save roughly $337 a month.
But here’s the catch: while this boosts purchasing power, experts warn it will also drive upward pressure on prices, potentially offsetting affordability gains for first-home buyers.
Economists expect further rate cuts before year-end, which could continue stirring the market.
Supply Still Tight - Competition Heating Up
The report also confirms a supply crunch: new listings across the capitals are down 3.3% year-on-year, while total listings barely budged, up just 0.8%.
Ms Timbrell points out that most Aussie homeowners are financially strong enough to hold firm rather than sell quickly. That means when prices plateau or dip, sellers tend to wait, squeezing supply further and turning up the heat on buyers.
Melbourne’s Catch-Up Moment Is Here
After being the weakest performer in 2024 with prices down 1.9% Melbourne is predicted to come back with a 4.1% rise in 2025 and a staggering 6.6% jump in 2026 the highest forecast growth among all capital cities.
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What The Agents Are Saying
Melbourne’s market is cautiously awakening.
Buyers are returning but remain watchful, waiting for further rate cuts before making their move.
Investor interest is reigniting, attracted by improving rental yields and promising capital growth.
With the Reserve Bank delivering three rate cuts this year, confidence is steadily building, setting the scene for a measured spring recovery poised to reshape Melbourne’s property landscape.
The Wow Factor!
42 St Georges Road, Toorak, Vic 3142
Where visionary architecture collides with flawless craftsmanship, this four-level Nicholas Day masterpiece sets a new gold standard for luxury on one of Melbourne’s most elite boulevards.
Why it WOWs:
Nicholas Day design on Toorak’s finest boulevard
Jack Merlo gardens around marble interiors
Lift & sweeping marble staircase over 4 levels
3.5m ceilings & light-filled living zones
Calacatta Monet kitchen + caterer’s kitchen
Terrace with city views, Wolf BBQ & heated poo
4 marble en-suite bedrooms + lavish Côte d’Azur primary suite
Rooftop domain with 5th bedroom, bar & 3rd kitchen
Home theatre, gym & wine cellar
Glass-walled 4-car garage, double gated security
Price guide : $19,000,000 - $20,500,000
In The Media
Borrowers get $155 a month relief in RBA rate cut
The Reserve Bank of Australia has just slashed the cash rate by 0.25%, dropping it to 3.6%, delivering a welcome boost to Aussie households. With inflation firmly within the target range and unemployment inching up slightly to 4.3%, the RBA’s carefully measured move injects fresh momentum into the economy without risking overheating.
This cut reverses last month’s cautious pause, backed now by solid quarterly data confirming inflation is truly under control.
The result? Borrowers with a $750,000 mortgage can expect to save around $155 every month unlocking greater borrowing power and turbocharging housing market demand.
Markets are buzzing, with major cities like Perth, Melbourne, and Sydney already riding growth waves. Experts predict this easing could drive national house price growth to an eye-popping 10-12% annually, potentially pushing the median home price beyond $1 million within a year!
As the RBA balances trade uncertainties and global slowdowns, this strategic rate cut offers a perfect blend of stimulus and caution fueling confidence for Aussie homeowners and buyers alike.
Final Thoughts
If you’re watching the Melbourne market, now’s the moment to pay attention. The combination of falling interest rates, rising auction clearance rates, and tightening supply is setting the stage for a market surge unlike any in recent years.
Buyers will need to move smart and fast and sellers should brace for renewed competition.
Melbourne’s time to shine? It looks like it’s finally arrived.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
