First-Home Buyers Flood Melbourne Market as Entry Prices Drop Sharply

First-home buyers are re-emerging as a force in Melbourne’s housing market, drawn by softer entry prices in the inner suburbs and a state government stamp-duty concession that took full effect this financial year.

The shift comes as Melbourne’s median house price sits at roughly $920,000, down about 3 per cent from its 2024 peak, while unit prices have held around $620,000. For buyers on a single income or dual household earning up to $130,000, the Victorian Government’s exemption on stamp duty for properties up to $600,000, and a sliding concession for homes up to $750,000, has widened the pool of affordable options.

Frankston corridor and inner-east units draw the most interest

Real Estate Institute of Victoria data shows first-home buyer auctions in June hit 340 across greater Melbourne, the highest monthly tally in 18 months. Suburbs along the Frankston train line, Bentleigh East, Cheltenham, Mordialloc and Seaford, accounted for nearly a quarter of those sales, with many buyers securing two-bedroom units or townhouses between $550,000 and $700,000.

In the inner east, agents in Richmond and Collingwood report increased bidding on one-bedroom apartments under $550,000, particularly in blocks built before 2010 that attract the full stamp-duty exemption. The Smith Street precinct in Collingwood has seen a string of sales to first-time buyers in the past six weeks, including a refurbished one-bedder at 15 Perry Street that sold for $495,000, $20,000 below its initial guide.

The trend is also visible in Moonee Ponds, where the recent conversion of a former nuns’ residence on Ailsa Street into a $3 million contemporary home sits at the luxury end, but neighbouring streets have recorded consistent sales of renovated flats in the $500,000-$650,000 range to first-home buyers.

Little-known policy bonus boosts borrowing power for 3 million

A lesser-known federal measure, the First Home Super Saver Scheme, is contributing to the uptick. The scheme allows eligible buyers to withdraw voluntary super contributions up to $50,000 for a deposit. With concessional tax treatment, a couple saving for two years can effectively add $15,000-$20,000 to their deposit pool compared with a standard savings account. Treasury estimates roughly 3 million Australians are eligible but many remain unaware of the provision.

Lending data from the Australian Bureau of Statistics shows first-home buyer loan commitments in Victoria rose 8 per cent in May compared with April, the strongest monthly gain in the country. The average loan size for first-timers in the state is now $489,000, up just 1.5 per cent year-on-year, well below the pace of overall price growth, suggesting buyers are consciously staying below the stamp-duty thresholds.

For buyers aiming at the market now, the window of opportunity is tight but not yet closed. Auction clearance rates in the sub-$750,000 bracket have held above 65 per cent through June and early July, according to SQM Research, indicating strong competition for entry-level stock. Agents advise focusing on suburbs along rail corridors where unit supply is relatively high, such as Heidelberg, Reservoir and Dandenong, and booking pre-auction inspections early, as most properties in this range are selling in under 25 days.