The past year has brought renewed energy to Melbourne’s Inner North property market. Falling interest rates and renewed buyer confidence are driving stronger turnout at open homes and auctions. While affordability remains a hurdle – particularly for first-home buyers – the market has proven resilient, with well-presented, well-priced homes attracting solid interest.
Family buyers have been especially active, particularly upsizers and those prioritising lifestyle. Limited supply has underpinned price stability, especially for well-located, high-quality homes. Properties needing significant renovation are slower to move unless priced to reflect the work required. Off-market sales have also increased, often succeeding where agents have strong buyer networks and local relationships.
The Reserve Bank’s decision to cut the cash rate in both February and May – while relatively modest in financial impact – has provided a major psychological boost. The shift in tone from ‘wait and see’ to ‘time to act’ is seeing more buyers back in the market. Further rate reductions flagged for the remainder of 2025 could help unlock pent-up demand.
The rental market remains under pressure, with persistently low vacancy rates and rising rents. Investor activity is still subdued, weighed down by compliance obligations, tax uncertainty and regulatory reforms. As a result, rental stock remains tight, further straining the leasing market.
Development continues to shape the Inner North, particularly along transport and retail corridors in Northcote and Reservoir. Medium-density projects – such as townhouses and boutique apartment buildings – continue to attract downsizers and young families. Warehouse conversions and heritage style renovations also remain popular. However, high construction costs have slowed some projects, with developers delaying launches or scaling back.
Adding to this momentum is record investment in local infrastructure. The Metro Tunnel is set to open this
