Victoria’s most overvalued property markets revealed: Mornington Peninsula, Toorak among overpriced areas

From the Mornington Peninsula to a blue chip inner-city suburb, the state’s most overvalued housing markets have been revealed. SEE THE TOP 20.

Suburbs on the Mornington Peninsula have the most overpriced housing markets in the state, new research reveals. Picture: iStock

Suburbs on the Mornington Peninsula have the most overvalued housing markets in the state, new research reveals.

Demand to Supply Ratio (DSR) Data shows houses in places like Blairgowrie, Dromana and Safety Beach were the most overpriced – determined by a range of metrics including if prices had risen dramatically over a short period of time, and were now well above the cost of similar homes in nearby areas.

Houses in Blairgowrie had a median cost of $1,778,300 — and according to PropTrack data, have risen in price by a shocking 21.4 per cent in the past three months.

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1 Wollert St, Rye, is for sale with a $1.3m price guide.

Well-priced homes are hard to find in Rye compared to surrounding neighbourhoods.

Blairgowrie was also considered overvalued. 27 Melibee St is on the market for $3.2m-$3.4m.

Similarly, Dromana houses had risen by 6.2 per cent and Safety Beach’s by 12.6 per cent, with houses in Rye also rising by a dramatic 10.9 per cent in the last quarter.

Kay & Burton Portsea director Liz Jensen said she had noticed the Blairgowrie and Rye housing markets “really bolt up” in the past 12 months.

“We’re used to Portsea and Sorrento fluctuating within reason, and prices went up during Covid purely because of the number of people wanting to get out of Melbourne,” Ms Jensen said.

“But Blairgowrie markets caught onto that same desperation (from buyers) and those who didn’t want to be in Sorrento or pay that price tag were going into Blairgowrie or Rye for the first time over the past 12 months. I heard valuers and buyers saying anything in Rye was now at least $1m.”

DSR Data also revealed Mornington’s unit market was one of the most overvalued, with a median cost of $826,000. PropTrack data showed unit prices in the suburb had soared 29 per cent since February.

Markets were also considered overvalued if the number of properties available were starting to outweigh demand, suggesting price falls were imminent.

DSR founder and data analyst Jeremy Sheppard said these markets were often areas where buyers could no longer justify paying the inflated prices on offer because they could get better value in nearby areas.

“If you purchase in these areas and you’re able to hold onto the property for the long term, it shouldn’t be a problem,” Mr Sheppard said.

“But who it will hurt are buyers who run into tough times soon after purchasing, as they may struggle to cover their transaction costs if they need to sell.”

He added that there was less scrutiny from buyers at the start of the pandemic when interest rates were lower and it was easier to get finance.

2 Prince St, Blairgowrie, is up for sale for $2.95m-$3.2m.

Also in Blairgowrie, 23 Maryrose St has a $2.4m-$2.6m price tag.

“As rates go up, more people start to have a reality check … that caution and scepticism about prices, when combined with higher interest rates, knocks demand out of the market,” Mr Sheppard said.

“In fact, nothing knocks demand out of the market more than when prices become too high, and that’s clearly happened in many areas. There was extraordinary growth in some suburbs and people can no longer accept the values sellers are asking.”

Despite this, BuyerX Mornington Peninsula director and buyer’s advocate Michael Sier said house prices along the Peninsula had now “caught up to where values needed to be” after increasing significantly during the Covid period.

“Right now is the optimum time to buy (here), there are less buyers around, interest rates are higher and vendors have largely adjusted to market corrections and market reductions in price,” Mr Sier said, adding that he had noticed vendors starting to meet market prices.

14 Chenier St, Rye, has a $2.15m-$2.25m asking price.

Dromana was another overvalued housing market. 24 Clarendon St is for sale for $3.5m.

And in Safety Beach, 29 Ragamuffin Point is up for a huge $5.2m-$5.72m.

Peninsula Sotheby’s International Realty managing director Rob Curtain noted that a high volume of inventory was on the horizon for Peninsula suburbs.

“People aren’t selling because there’s uncertainty around negative equity from people who don’t want to lose their money, but that’s going to change very quickly,” Mr Curtain said.

“Rates are rising and thanks to Dan (Andrews) we’re seeing higher land tax, so we’re going to see high inventory levels very quickly.”

In the city, blue chip suburb Toorak was also among the most overpriced, with a current median house price of $3.58m.

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