What can we anticipate in the Spring property market?

Spring in Melbourne has always represented the highest energy, and the highest transaction numbers in real estate. Football season behind us, blossoming gardens and warmer days seem to bring both buyers and sellers out of hibernation. But this year, there’s a particular buzz building – and it’s not just the bees coming out to enjoy the flowers.

With the growing likelihood of interest rate cuts on the horizon, the property market is poised for a shift. The change in sentiment will be felt across every buyer group – from first home buyers to seasoned investors – and it will also encourage more vendors to take the plunge and list their homes. Vendors have been poised to sell only once rate cuts hit, in the hope of achieving stronger buyer competition. And of course, as borrowing capacity constraints are relaxed, higher prices correlate.

Why Interest Rates Matter Right Now
For the last couple of years, higher borrowing costs have tested buyers’ budgets. Many have been sitting on the sidelines, waiting for a sign of relief. If rates drop – even modestly – the psychological boost is often more powerful than the actual financial difference in monthly repayments. Buyer confidence returns, and so does competition.

It’s a delicate balance for buyers though. While many want to take advantage of heightened borrowing capacity, they are terrified of hoards of other buyers creating tough competition.

In Melbourne, it’s a real case of FOMO vs better-opportunity.

“Do we wait until we can borrow more and buy something better? Or do we jump in quickly now before the hoards do?”

Vendors will be watching closely too. Lower interest rates, combined with Melbourne’s improving market is rekindling sellers’ hopes of securing higher prices.

Agents are anecdotally reporting an increase in appraisal activity, but noting the vendors are waiting for the interest rate cut. Typically, appraisal activity is a leading indicator of future listings. The current conditions suggest that more stock will come onto the market once we have another rate cut – a welcome relief for buyers tired of the slim pickings through winter.

First Homebuyers
Many interstate first homebuyers have faced a challenging run, particularly in Brisbane, Adelaide and Perth. Rising prices in early 2024, coupled with tighter budgets from interest rate hikes, made the market feel out of reach for many. However, for Melburnian first homebuyers, things have been more favourable. Limited investor activity, higher rates of investor-led sales, static/softening prices and government incentives have all resulted in Victorian first homebuyers having optimised opportunity over the past few years.

However, if interest rates fall in spring, we’ll also see renewed participation from this group, particularly in the sub-$900,000 bracket where competition is fierce. Not only will more first homebuyers be competing against each other, but stronger investor numbers will also create tough competition for the cohort.

While extra listings will help, they should brace for a more competitive environment, especially in desirable, entry-level suburbs close to transport and amenities.

Upgraders
For upgraders – those moving from a first or second home into something bigger – the spring market could feel like a window of opportunity. Increased stock levels give them more choice, and if they’re selling and buying in the same market, they can benefit from improved buyer demand without being priced out of their next step. However, timing is everything. Upgraders should carefully consider whether to sell first or buy first, or to attempt both in tandem.

Downsizers
Downsizers have a slightly different set of drivers. For them, it’s less about borrowing power and more about lifestyle and timing. Spring’s surge in listings means more opportunities to secure the “right” home – whether that’s a low-maintenance townhouse, an apartment near the grandkids, or a property with better accessibility. While competition may rise, particularly in high-quality developments and locations, downsizers can use their equity and cash flow advantage to move swiftly when they find the perfect fit.

This particular cohort is the one that often beats the competition at auction, leaving a trail of broken hearts.

Investors
Investor activity in Melbourne has been subdued in recent years. The reasons for this include interest rate pressure, expensive compliance requirements, rental reforms, and increased land tax. However, Melbourne’s rental market remains tight, with vacancy rates low and rents remaining strong. Interstate investor activity in Melbourne has been strong through 2025 despite the headwinds listed above. A drop in interest rates could amplify current demand and also spark renewed local interest from investors seeking capital growth opportunities ahead of the next cycle. Well-located properties with strong rental appeal will likely be on their radar.

The Takeaway for Buyers
Spring 2025 in Melbourne is shaping up to be a stronger capital growth market than we’ve seen in recent years. Buyer competition is likely to heat up, but the return of vendors should ease the bottleneck of low supply.

Will the supply and demand changes on both sides mean that the market remains in a similar balance? Quite possibly.

My advice?

• Be prepared early. Get your pre-approval in place and know your budget before the rate chatter turns into action.
• Do your homework. Watch auction results, attend open homes, and understand the value of the properties you’re targeting.
• Move decisively. When the right property comes along, hesitation can cost buyers lost opportunity in a rising market.

This year, with the likely shift in interest rates, the Melbourne market is tipped to see one of its liveliest springs in years.

As we know, data reporting has a natural time lag. Those watching from afar won’t spot the market shift at the same time as those on the ground. Prepared buyers could find themselves getting in before the hoards.

For more information on the current market conditions, follow this interview with Sadhana Smiles, Cameron Kusher and myself: