Melbourne’s property market is expected to start a major growth spurt in the next financial year. Picture: Valeriu Campan.

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Melbourne has been tipped for a home price boom that would add almost $60,000 to the city’s typical property price in 12 months following an interest-rate cut.

But the city will have to limp through the rest of the financial year with virtually no growth expected before June 2025.

The big call from Oxford Economics comes just after some of the smallest Consumer Price Index growth figures this year, having dropped to 2.8 per cent in September data released on Wednesday.

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While CPI dipping below 3 per cent had been tipped to prelude an interest-rate cut, the firm’s senior economist Maree Kilroy has warned she doesn’t believe the first reduction in home loans will be made until June next year.

But when they do come through, she said Melbourne’s units and houses were likely to rise in value by 7 per cent in the 2026 financial year.

Contrasted with PropTrack’s Home Price Index $792,000 median dwelling price for Melbourne released on Friday, the 7 per cent up tick would add about $59,688 and take the city’s typical residence cost to $852,700.

Home prices in Melbourne could rise almost $60,000 in the 2026 financial year.

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It would also go a long way to helping the Victorian capital close the gap with Brisbane, which has risen to become the nation’s second-priciest major city in the past two years.

“Victoria does get an affordability advantage that is working in its favour compared to other states,” Ms Kilroy said.

“In the long run, Melbourne shouldn’t be cheaper than Brisbane. It fundamentally has higher household income. And that does prime it for stronger growth, especially when you get those rate cuts.”

The economist added that she believed the pick up will be led by people buying homes, rather than investors.

The forecast follows the release of Australian Bureau of Statistics lending data that shows two in five owner occupier home loans issued in September went to first-home buyers.

First-home buyers have taken charge of Melbourne’s housing market.

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It is the highest figure in the country outside of the ACT, and cemented Victoria as the nation’s biggest first-home buyer market.

“There are benefits in Victoria, for first-home buyers, in that you are not seeing the price growth sustained that you are in Queensland — so that deposit hurdle is more attainable,” Ms Kilroy said.

“And that could be a contributor to first-home buyer numbers.”

However Ms Kilroy said it was likely that when Melbourne’s home prices begin to rise, downsizers and those looking for a bigger second or third home would catch up with the state’s first-home buyers and lead to a broader buying base.

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