Perth Overtakes Melbourne in Median Home Value: What This Shift Means for Property Investors
In a notable shift within Australia’s dynamic property landscape, Perth has surpassed Melbourne in median dwelling value for the first time in over a decade, according to the latest PropTrack Home Price Index (May 2025). Perth’s median now stands at $787,000, slightly ahead of Melbourne’s $782,000. This reversal has prompted investors to reconsider the long-held hierarchy of Australia’s capital city markets.
While comparisons across cities must consider differences in housing types, such as Melbourne’s higher proportion of apartments, Perth’s rise is underpinned by a compelling mix of affordability, strong rental returns and rising population pressures.
What Has Fuelled Perth’s Rapid Growth
Perth’s transformation from a subdued market following the mining downturn to a national leader has been driven by three key factors.
- Affordability and Lifestyle Appeal
After a decade of relatively flat growth, Perth presented value to both investors and owner-occupiers. As borrowing capacity declined in 2022 due to rising interest rates, east coast buyers looked to Perth for its affordability, lifestyle benefits and solid rental yields. - Population Growth and Housing Shortfall
Western Australia’s population surged through both interstate and international migration. However, housing supply failed to keep pace, as builders faced material shortages, labour constraints and cost blowouts. This imbalance placed upward pressure on property prices. - Tight Rental Market and Investor Demand
With vacancy rates near record lows and rental prices rising significantly, Perth became increasingly attractive to investors seeking reliable returns and strong cash flow.
Why Melbourne Has Lagged and Why That May Soon Change
Despite its size and global reputation, Melbourne has underperformed in recent years. Factors such as slowed migration during the pandemic, increased land and property taxes and rising landlord costs have impacted market activity.
Over the past five years, Melbourne’s price growth has remained relatively subdued compared to other capitals. However, the city’s strong economic base, improving migration trends and tightening rental market indicate a potential recovery is on the horizon.
Melbourne’s Opportunity: A Market on the Verge of Recovery
For property investors, Melbourne currently offers good value. Prices remain below their 2022 peak, interest rates are expected to ease, and rental yields are improving, particularly in inner and middle-ring suburbs where demand is strongest.
In addition, population growth is accelerating while new housing construction remains limited. These conditions are creating the groundwork for a potential uplift in both buyer demand and property values.
