The Victorian suburbs where home prices may have peaked, buyers risk ‘overpaying’ | SuburbData

Aussie homebuyers have been warned they risk “overpaying” in dozens of popular suburbs that could lose ground in 2024, despite wider predictions of home price rises.

Aussie homebuyers have been warned they risk “overpaying” in dozens of popular suburbs that could lose ground in 2024 despite wider predictions of home price rises.

Just seven of the suburbs on SuburbData’s caution list are in Melbourne, with more than twice that number in Sydney, Brisbane and Adelaide.

But those considering a sea-change in the Victorian capital have been told there is a strong chance of price falls or low growth in a few Mornington Peninsula pockets, as a rise in land-tax motivated sales combined with interest rate hikes that have left buyer budgets short of the Covid-19 era coastal home price boom.

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Sorrento and Safety Beach were ranked equal poorest in the state for their market-cycle timing — suggesting while home values there could rise again longer term, they were unlikely to in the near future.

23 Coppin Rd, Sorrento sold in November 2023 for $5.1m.

The firm’s data analyst Jeremy Sheppard said there was now a risk of “overpaying” and a high possibility prices could retract.

“If you buy now, you have to be cautious,” Mr Sheppard said.

“If you were a buyer in these locations, you shouldn’t expect any capital growth in the short-term. It will be a while until you see any equity growth.”

He advised waiting three to six months to see if this did occur.

“And if you’re a homeowner in one of these areas, and you’re considering selling, you should do so straight away,” Mr Sheppard said.

“Now is a good time. You have probably already made a fair amount in equity.”

The warning from SuburbData is based on analysis including falling auction clearance rates, online engagement and even early signs of home prices dropping.

26 Azure Ave, Balnarring just sold in March for $1.21m, after changing hands in December 2020 for $859,000.

This is used to score suburbs out of 100 for where they are in the property market, with 100 meaning they’re ready to boom and scores below 20 considered to be on the verge of peaking and with little room for growth.

Just seven Melbourne suburbs were ranked at 20 or below, but the only suburb identified as potentially overvalued outside of the Mornington Peninsula was Seaholme near Altona.

The firm also tracks demand to supply ratios, with the same seven suburbs scoring poorly in this regard as well.

Given the high prevalence of holiday home destinations, Mr Sheppard said it appeared the sea-change trend that emerged during Melbourne’s lockdowns had now “run out of gas”.

Ray White chief economist Nerida Conisbee said coastal holiday home markets across the country were looking less likely to see price increases in the year ahead.

“Last year we saw a lot of holiday home sell offs, though this year hasn’t been as bad,” Ms Conisbee said.

43 Seahaven Way, Safety Beach just sold in February for $1.45m.

But with an interest-rate cut now the next most likely change to home loan costs, she added that more owners in the area might look to hang onto their properties despite an increase to land tax which commenced in Victoria this year.

Sotheby’s International Realty Peninsula boss Rob Curtain noted the increased impost on holiday home owners had motivated quite a number of sales and there would be more in spring.

But with values already dropping after the sea-change boom’s “craziness”, tax bills were expected to fall as much as 20 per cent in 2025.

Ray White chief economist Nerida Conisbee were coastal holiday home markets Australia wide were looking less likely to see price increases in the year ahead.

He added that homes were sitting on the market longer as sellers took time to adjust their expectations in line with what buyers were able to pay.

But there is a light at the end of the tunnel for the Peninsula, with an expected rise in the number of Baby Boomers heading to the coast raising the odds of a future boom.

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Originally published as The Victorian suburbs where home prices may have peaked, buyers risk ‘overpaying’ | SuburbData