DEMON Harley Balic has announced his immediate retirement from the AFL after falling out of love with the sport.

The 21-year-old joined Melbourne in the off-season after playing four matches in two seasons at Fremantle, where he struggled with homesickness and "depressive episodes".

Balic twice took indefinite leave from the Dockers to return to Victoria and be closer to family.

He kicked 16 goals in 11 games this year for the Demons' VFL affiliate Casey, including a six-goal haul against Coburg in round one, but was unable to break into the club's senior line-up.

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Melbourne gave up pick 65 in last year's draft to secure the former Sandringham Dragons product.

"It was an easy decision in the end, as I've thought about it for a little while now," Balic told melbournefc.com.au.

"It's something I'm not going to regret and I'm very appreciative to Melbourne for letting me come to the club for a second chance.

"I've always loved football, but my heart's not in it and everything ends up being a grind and I think it's just the right thing to do.

"The (Demons') VFL and AFL (teams) are both going to be successful this year and it's something I’d love to be a part of, if I loved it, but unfortunately I don't and it's time to go out into the real world and see what else is out there for me."

Fremantle selected Balic with pick 38 in the 2015 NAB AFL Draft and soon after he required wrist surgery for a third time to correct a problem that started when he dunked a basketball two years earlier.

Balic opened up on his personal struggles in February this year, revealing he suffered "some bad anxiety and even panic attacks" and felt isolated in Perth.

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A hamstring injury caused him more distress and triggered the second bout of leave from the Dockers and he made the realisation that he need to return to Melbourne.

"Eventually how I was feeling mentally, I realised that if I didn't get right I wasn't going to play good football," Balic said.

"So I came back and looked at a lot of things, spent some time with friends and family and felt happier with those people around me and I knew that's where I wanted to be."

Melbourne's general manager of football operations, Josh Mahoney, said Balic made the right choice to retire, given the circumstances.

"AFL football is a tough and uncompromising industry that requires players to be fully invested and have the drive and passion to thrive," Mahoney said.

"We have been in discussions with Harley throughout the year and support his decision to retire and move on with his life."