Melbourne: Is the Market Set for a Strategic Rebound?

Melbourne may be feeling like the underdog, but if my favourite team Liverpool FC has taught us anything over the past few years, it's that underdogs have the power to surprise.

Beneath the surface of high taxes and a weak economy, there’s a growing potential for a well-timed resurgence—much like Liverpool’s ability to find resilience and momentum when it mattered most this past year. With the right game plan, this city’s property market could be the next champion investment.

In this second deep dive into Australia’s major cities, following Sydney, we explore whether Melbourne is on the brink of a rebound that could present valuable opportunities for investors prepared to act strategically.

1. Price Declines – A Golden Opportunity To Buy Low

Melbourne’s property market has seen a sharp decline in prices, with more vendors discounting to close sales, offering unique value for money and a rare chance for buyers to negotiate better deals.

Unbelievably, the market is now more affordable than Brisbane and Perth.

For investors, this creates a prime opportunity to purchase at prices not seen in years. Simply a buyer’s haven, investors are able to be picky with the properties they’re seeking, not to mention superior bargaining power on both price, and terms.

Melbourne’s property prices have headed south, especially in premium areas, whilst more affordable neighbourhoods are holding steady.

2. Rising Rental Yields – A Silver Lining

Despite falling prices, Melbourne's demand for rentals remain elevated as yields are amongst the best amongst all capital cities, offering solid returns for income-focused investors.

Yields have reached 3.5-4%. Investors can lock in great rental returns now, benefiting from both higher income and potential capital gains once the market turns around.

3. Economic Prospects – Recovery on the Horizon

Melbourne's current economic challenges have weighed on the market, from higher unemployment to slower consumer spending.

But the potential for interest rate cuts in the near future suggests that Melbourne could see a stronger recovery than many anticipate. Economic recovery tends to lead to increased demand for property, and this is something to keep in mind as we look ahead.

The Bigger Picture

Like a team finding its form after a rough patch, Melbourne’s long-term fundamentals—tightening housing supply and continued population growth—indicate that while the short-term outlook may seem tough, the foundation for future gains is solid.

When supply is tight and yields are up, the potential for growth is enormous – if you know where to look.

Quoting a Rothschild,

“Buy when there’s blood in the streets.”

The question is, who is ready to act before everyone else catches on?