Pace of growth for houses under $950,000 in Melbourne — what’s really happening?

The sub-$950,000 housing options in Melbourne are under extreme demand currently. This part of the market that matters most to first-home buyers, upgraders on a budget, and many investors. It’s also the part of the market that’s been the first to respond to the 2025 rate cuts and government stimulus, and the first to reveal where demand is concentrated. Since 1 October, this already-tight stock is now also within reach of the First Home Guarantee caps. The federal expansion of the First Home Guarantee has encouraged more buyers into the market and those who are looking for a family home on a budget are circling the suburbs within this price range.

The suburbs of particular interest to us are those within a 20km radius.

However, competition is keen, and navigating this segment of the market is not for the feint-hearted.

Throughout 2025, Melbourne’s dwelling values and house values have been rising month-on-month, albeit at a more measured pace than some smaller capitals. Different indices report slightly different speeds, but the consistent message is growth rather than stagnation. Hedonic indices and market trackers put Melbourne’s recent quarterly gains in the low single digits and annual growth below the national leaders, however the middle tier has recenetly delivered the strongest growth. We also appreciate that data lag counts for a lot when it comes to data reliability.

Where growth is fastest (and why)

Not every suburb offering sub-$950,000 exhibits the same.growth. Locations with low listings, good or improved amenity, infrastructure upgrades or commuter convenience are seeing sharper rises. Those neighbourhoods which are offering traditional-sized block of land (as opposed to micro blocks akin to the newer subdivisions) are receiving a disproportionate share of interest, which tightens competition and lifts the pace of growth.

Some of these examples include, but aren’t limited to the following suburbs:

Frankston North, Karingal, Carrum Downs, Boronia, Chirnside Park, Springvale, Noble Park, Bayswater, parts of Watsonia and Ferntree Gully, Lalor, Thomastown, Attwood, Epping, St Albans, parts of Sunshine West and Ardeer, parts of Hadfield, Deer Park, Altona Meadows, and Laverton.

There are others in the mix that we avoid for social demographic reasons, and not all of the above would necessarily make the grade for us from an investment lens viewpoint. However, these suburbs are experiencing impressive growth due to this heightened demand.

We prefer to target those in the inner 18km radius, supported by rail infrastructure, and in established suburbs. We steer clear of those with house and land releases in adjacent areas.

A recent catch up with a lovely reader who reached out to Pete and I was very rewarding. Tom read our book and navigated his journey in Melbourne’s middle ring northwest. Tom joined us for a coffee and shared his adventures, landing on a house in Attwood on a large, freehold block, and within walking distance to local shops.

Tom’s journey wasn’t indifferent to client’s we’ve worked with. These highly competitive areas aren’t meeting the buyer demand when it comes to available properties. The open for inspection attendance rates are enormous, and in many of these locations, agent underquoting is rife.

For first homebuyers, it takes a few disappointments to get familiar enough to tackle the offer or auction process.

Tom had a couple of initial disappointments too, but once he and his partner identified the property that they were keen on, they applied the fundamentals that Pete and I discussed in our book. The comparable sales analysis was something that Tom discussed over our meeting. He had ample data points that he could rely on, and also understood the impact of a moving market. The property they chose to target was being sold with an expressions of interest deadline, and the vendor was seeking an array of “best and highest” offers.

Tom moved quickly. His finance was approved, his due diligence was finalised, and he was comfortable to commit in writing with his formal offer. His pricing analysis included a considered growth rate from the previous, recent sales. This is important in a moving market.

If a market is moving at 1% per month, a $900,000 buyer will need to add $9,000 to the comparable sale value from the same time in the prior month.

This can be difficult for many buyers who fear overpaying, but the hard reality is that moving markets will exhibit a new record being set every month.

Tom’s future plan is exciting, and he and his partner don’t view Attwood necessarily as their forever home, but it is a key foundation piece in their property journey. They plan to utilise the equity to purchase another property in due course. Although they underestimated how much they love their new community.

Our advice to our clients in this highly competitive space isn’t just hinging around preparedness to strike quickly and finance approvals being in place. Our recommendations go beyond this and focus on the identification of high-quality properties with great bones, but rougher diamonds than many buyers are chasing.

The smartly presented, painted and styled properties with on-trend finishes are attracting hoards of buyers. Typically, they are the properties which are attracting the record prices. Northerly orientation, houses with ensuites or fourth bedrooms, those with parkland nearby…. they attract even higher prices.

But a good tip for buyers who are struggling with the competition levels is to focus on the houses that could respond well to a simple, cosmetic update. An older style kitchen, floral carpets, houses in need of a repaint… these are all the attributes that a buyer should be prepared to either live with in the short term, or update with a fixed budget.

Targeting the rough diamonds can yield a far better result when the property passes the building inspection and meets all the criteria.