August 2025 Newsletter
HEY NEIGHBOUR!
As we step into August, with our days getting a little longer - the Melbourne property market continues to show renewed momentum. Prices have rebounded in the first quarter of 2025, and forecasts suggest the city could once again be flirting with a $1 million median house price by 2026. This growth is being supported by improving buyer confidence, low stock levels, and the likelihood of further interest rate cuts from the Reserve Bank in the coming months. On an agency level we have experienced a lot of interest from interstate buyers, especially from Financial Advisors / Buyers Advocates – all cashing in on low apartment pricing and high yields.
Melbourne’s auction market remained strong through July, with clearance rates averaging around 76% - the city’s best winter performance in over two years. Auction volumes were solid, averaging 650 - 850 homes each week, and competition remained high. These results signal healthy buyer demand heading into the spring selling season.
The RBA’s expected move to reduce the cash rate in August would mark another step towards easing mortgage pressures, (overdue in my opinion) with economists predicting more cuts in this second half of 2025 and into 2026. While this will be welcome news for many homeowners and investors, it comes against the backdrop of persistent cost‑of‑living challenges. Despite inflation slowing, household expenses remain elevated, with housing, utilities, food and health costs continuing to stretch family budgets. This means that while market conditions are improving, affordability remains front of mind for many.
Beyond the property world, Melbourne’s AFL season is heading into its final stretch. Unfortunately for Carlton supporters (and yes, we feel awful pain), the season hasn’t delivered what we’d hoped for. With finals out of reach and performances falling way short of expectations, many Blues fans are now looking ahead to next year with cautious optimism - and perhaps a touch of resignation. Lots of trade talks but the worst would be Silvagni ending up going to Collingwood!
In this month’s edition, we unpack four key stories shaping the property landscape right now: the RBA’s rate outlook, Melbourne’s price rebound, the long‑term forecast for our city’s housing market, and how the cost‑of‑living squeeze is influencing real estate decisions. Whether you’re a homeowner, investor, or looking to enter the market, these insights will give you an interesting read.
Stay warm and take care,
Carmela
Carmela
MARKET INSIGHTS
We strive to stay up to date on the latest market trends. Here are a few articles we think are worth reading.
RBA Poised for Further Rate Cuts (reuter.com)
The Reserve Bank of Australia is expected to deliver another 0.25% interest rate cut at its August 2025 meeting, following softer inflation data now within its target range. This would bring the cash rate down to 3.60%, with economists forecasting further cuts into 2026.
Key Points:
- Inflation falls sharply to 2.1%, opening the door for further cuts.
- Markets expect 3–4 more cuts by early 2026, potentially taking the rate near 3.0%.
- Lower mortgage rates likely to spur property market activity in Melbourne.
Melbourne Home Prices Rebound in 2025 (realestate.com.au)
KPMG forecasts Melbourne house prices will rise 3.5% in 2025 and 6% in 2026, potentially pushing the median close to $1 million. Low supply, strong demand and expected rate cuts are tipped to fuel the growth, though affordability pressures may slow the pace.
Key Points:
- Median could reach ~$980k–$1M by late 2026.
- Rate cuts and low listings expected to keep prices rising.
- Buyers may face increased competition as confidence returns.
Melbourne on Track for $1M Median by 2026 (realestate.com.au)
KPMG forecasts Melbourne house prices will rise 3.5% in 2025 and 6% in 2026, potentially pushing the median close to $1 million. Low supply, strong demand and expected rate cuts are tipped to fuel the growth, though affordability pressures may slow the pace.
Key Points:
- Median could reach ~$980k–$1M by late 2026.
- Rate cuts and low listings expected to keep prices rising.
- Buyers may face increased competition as confidence returns.
Household Budgets Under Pressure: Rising Living Costs in Australia (theguardian.com)
Australian households are still feeling the bite of inflation—even as headline inflation slows. Rising mortgage payments, bills, and daily essentials continue to stretch budgets thin, especially for working families.
Key Points:
- Essentials Driving Up Costs – Housing, health, food, and energy bills remain elevated.
- Wages Lag Behind – Working households saw living costs rise 3.4% annually, outpacing wage growth.
- Prices Still High – Economists warn affordability may not improve until wages catch up.
