Should You Rent or Buy in Today’s Melbourne Housing Market?


Are you looking at the Melbourne housing market, scratching your head and wondering whether it is cheaper to rent or buy? The past few years have certainly proved tumultuous in the property market, with lockdowns and supply chain shortages creating incredible shifts in demand as the availability of new properties became scarcer. 

What’s more, we are now firmly in an adjustment phase within the housing market in Australia, leaving many unsure of whether they should become homeowners, or take advantage of the benefits of renting a house, such as added flexibility and freedom. 

In this article, our specialists at Noel Jones break down everything you need to know before making your decision. 


An Overview of the Current Melbourne Housing Market

The Melbourne housing market remains in high demand, with data from the Australian Bureau of Statistics forecasting that it will be the nation’s fastest-growing city over the next decade. 

After barrelling out of rapid growth throughout 2020 and 2021, however, the values of dwellings are slowly falling back into correction territory:

Property Type Average Price Month-on-Month Change Quarter-on-Quarter Change Annual change
Dwellings within the Capital City $752,777 -1.20% -2.90% -8.10%
House within the Capital City $905,894 -1.40% -3.40% -9.4%
Units within the Capital City $589,752 -0.80% -1.60% -4.80%
Regional Dwellings $565,942 -0.70% -2.90% -1.30%

Source: Corelogic, 2nd January 2023

This change was partly driven by a number of new properties being built throughout the state, as well as many locals choosing to move interstate, bringing the balance closer between supply and demand. 

There are also the consistent rises in the cash rate to consider, jumping from 0.35% to 3.1% in just eight months, making it more expensive to borrow money:

Effective Date Change% points Cash rate target%
7-Dec-22 0.25 3.1
2-Nov-22 0.25 2.85
5-Oct-22 0.25 2.6
7-Sep-22 0.5 2.35
3-Aug-22 0.5 1.85
6-Jul-22 0.5 1.35
8-Jun-22 0.5 0.85
4-May-22 0.25 0.35



How to Decide Whether to Rent or Buy a House

Unfortunately, there is no definitive answer as to whether you should rent or buy a house in Melbourne. Instead, there are a variety of factors to consider, balancing the conditions of the housing market in Australia against the options that best fit your current financial situation, lifestyle and long-term plans. 

Regardless of whether you decide it is cheaper to rent or buy, you need to make an informed decision that you won’t regret down the road.


Advantages & Disadvantages of Buying a House

Owning a home can offer many benefits. For example, with every mortgage repayment you make, you are building equity in the property. Over time, this can lead to substantial savings and the start of generational wealth building. Moreover, as a homeowner, you can make changes to your property to suit your needs and style, increasing the value of your home, as well as how you enjoy it. You also won’t have to worry about leases ending and having to relocate at the command of your landlord. 

It’s true that average house prices are still close to record highs and could continue to drop, but then again, interest rates are also likely to continue rising to tackle inflation. This means any savings on house prices could be eaten up by higher mortgage repayments.


Drawbacks & Benefits of Renting a House 

One of the main benefits of renting a home is the flexibility it offers. If you aren’t looking to settle down or commit to a long-term mortgage, renting can allow you to move quickly if needed without the stress of selling a property. Additionally, renters do not have to worry about the costs of maintenance and repairs as those responsibilities fall on the landlord. This can be especially beneficial if you live in an older property where repairs may be more frequent or costly.

Another advantage of renting is that it often requires lower upfront costs to live in your preferred property. Renters typically only need to pay the first and last months’ rent and a security deposit, while homebuyers need to save for a down payment, closing costs, and other upfront expenses.

With a higher demand than there is supply in the Melbourne housing market, however, competition is strong.


Speak with an Expert on the Melbourne Housing Market For More on Whether to Rent or Buy

If you are looking to buy a house or for a rental property in Melbourne, please speak with our team at Noel Jones today for the latest updates on the housing market.


More Posts

November CSP Grant Winner Announced

Congratulations to Surrey Park Football Club, the November Noel Jones Community Support Program grant recipient. Surrey Park Football Club was founded in 1995, when the Surrey Hills and East Camberwell Football Clubs came together as one. Prior to coming together both Surrey Hills and East Camberwell had proud and rich histories with origins stretching way back to 1887 when the

Market Update October 2023

October saw strong sentiment exhibited by both buyers and sellers keen to achieve their property goals prior to the end of 2023. PropTrack Economist Anne Flaherty believes that many who held off their plans to sell are now listing their properties in light of greater buyer demand. She suggests buyers are now more confident to purchase property again after a

The benefits and drawbacks of investing in property

If you are considering property investment, it is important to weigh both the potential benefits and drawbacks so that you can decide if it is the right choice for you. The experts at Noel Jones have compiled an in depth list below exploring both sides to help you on your investment journey. The benefits of property investment No specialist skills

27 things to do and see in Melbourne’s east this summer

The eastern suburbs of Melbourne is packed full of things to do and see. Here’s our top 27 picks of things to do this summer. Let the kids burn off some steam at Flip Out, Box Hill Take in a show at Karralyka, Ringwood Take in the view and get lost in a maze at SkyHigh, Mt Dandenong Get back to

Send Us A Message

Good Job!

Thanks for taking the time to let me know about your needs.

I look forward to helping you find your new home.​

Buyer Requirements

Thank you!

I’ll be in touch soon with information on the suburb you’re buying in.

Find Out More