The Melbourne suburbs where house prices fell the most this year

A range of Melbourne suburbs have recorded price falls over the past 12 months, despite a modest rise in house prices which defied market expectations. But the declines were modest.

The outer north’s Jacana recorded the biggest fall, at 6.6 per cent to $556,703, followed by Albert Park at 6.3 per cent to $2,275,200 and Alphington at 5.7 per cent to $1,938,181 on CoreLogic data.

There were 70 suburbs which recorded house price falls over the 12 months to November. CoreLogic’s head of research, Tim Lawless, said the neighbourhoods that recorded price falls appeared disparate at first blush, but that two main trends were in effect.

“The inner suburbs comprised the top seven of the 20 suburbs,” he said. “The inner suburbs tend to be considered affluent.

“The strength of the market upswing was around that inner fringe. Towards the end of the year, that was the area of the market that slowed the most visibly as well.”

On the other hand, outer suburbs were less insulated from the wider economy.

“These areas have shown much lower levels of growth through the year, especially early in the cycle,” Lawless said. “This is probably where households have been more thinly stretched and households have been feeling the cost of living crisis.”

Unit prices fell the most in Black Rock (down 9 per cent to $1,030,505), followed by Kingsville (7.7 per cent to $500,241) and Carlton (5.4 to $353,375).

The market weakness had caused expensive suburbs like Albert Park to become better value than they typically would be, said Belle Property Albert Park director David Wood. Buyers were less inclined to buy fixer-uppers because of issues with construction which had been prevalent all year.

“The unrenovated homes are what’s showing real value in the market, more than a year ago,” he said. “[The cost of] building materials are the big thing that we’re hearing. The turnaround time at council for permits is another reason.

“And the capacity for people to find trades, a builder who’s able to do it, has also diminished.”

Fully finished homes were still attracting a lot of buyer interest and higher prices, Wood said.

“I think the worst is behind us. Judging on some of the sales that we’ve had in the last fortnight before Christmas, the attitude of buyers is to act.”

He said prices were not directly affected by the high rates.

“There’s a large percentage of homes that are owned outright. So we haven’t seen any evidence of mortgage stress,” said Wood. “The ones that are rented out are long-term rentals so they won’t be big mortgages on those.

“It’s more the sentiment that has been holding back the marketplace.”

In Jacana, however, the cost of living crisis had hit hard.

Barry Plant Glenroy agent Richard Ali said the lower prices in the area were because buyers had less to spend.

“It does have to do with the interest rate. They do have less money,” he said. “People [used to] offer you 2 to 10 per cent less than the quote, now they’re offering $100,000 below.

“Now there’s more bargain hunters than genuine buyers.”

Ali said the suburb was still popular, though, and predicted conditions would improve over the next 12 months.

“The prices have kept really well over the years. There’s always not many listings. Next year, I think the market’s going to get much better everywhere.”

Wood was similarly optimistic.

“I think there will be stronger buyer demand next year and buyers being more willing to act. From March to August it was maybe one of the worst years for real estate,” he said.

Lawless was less sure. “It’s looking like that rate of [price] decline has accelerated over December. Melbourne is now seeing a subtle decline,” he said.

“This shortage of available or advertised housing supply was a key factor in keeping prices higher but it’s just not there any more.

“That crutch has dissipated as vendors have become more active.”