Victorian suburbs where home prices are overvalued | Suburb data

The Victorian government has been blamed for shunting some of Melbourne’s once thriving suburbs onto the city’s most overvalued list. SEE THE LIST

The Victorian government has been blamed for shunting some of Melbourne’s once thriving coastal suburbs onto the city’s most overvalued list.

Suburb Data has ranked eight Mornington Peninsula towns and suburbs among the Victorian capital’s most overvalued areas, with Safety Beach, Rye and Bittern among them.

Other areas in the outer south east including Beaconsfield and Cranbourne made the list along with East Melbourne and Lower Plenty in the city’s north east.

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Suburb Data analyst Jeremy Sheppard said home seekers looking to purchase in an overvalued regions needed to be cautious.

11 Gawalla Street, Rye sold for $860k in July.

“If you buy in an overvalued market there is a very high chance the prices are peaking and you can expect little to no growth in home values after purchase,” Mr Sheppard said.

“In extreme cases, you could fall into negative equity as the prices adjust because overvalued markets can retract over time. This would be devastating if you had to sell.”

Advantage Property Consulting director and buyers advocate Frank Valentic said the Peninsula’s house prices were now recalibrating, after surging up to 50 per cent as buyers sought to escape 2020-21’s Covid lockdowns.

Source: Suburb Data, PropTrack Market Trends Suburbs July 2024

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But he said the state government’s land tax increase on secondary and investment properties worth $50,000 or more, reduced from a $300,000 threshold before January, was a major reason many owners were selling.

Mr Valentic said his second home in Dromana had been hit with a 75 per cent land tax rise across 12 months.

“And land tax is now calculated every year and before it was every two years,” he added.

However, YPA Rye managing director Ben Nutbean said properties in the region remained in demand with $1.5m-$2m addresses attracting multiple offers from buyers.

“It’s definitely not doom and gloom, properties are moving and the market is remaining transactional,” Mr Nutbean.

22 Alice St, Mt Martha sold for $2.935m in June.

“We’re still seeing a lot of people seeking a lifestyle change.”

Morrison Kleeman director Rocco Montanaro said interest in Lower Plenty also remained strong as there were fewer properties for sale.

“We get excited when we list a house because we know it’s going to sell,” Mr Montanaro said.

“It’s always been a sought-after suburb and in terms of price, there’s still a way to go because it’s just becoming harder and harder to find a home there.”

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