PropTrack: Melbourne home prices falling in 110 suburbs, expert reveals where to buy
Dozens of Melbourne suburbs have recorded house price falls in the tens of thousands of dollars in the past year. Experts have revealed which ones you might want to buy in.
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House prices have fallen tens of thousands of dollars in 38 Melbourne suburbs even as most of the city fires up, giving buyers a rare chance to buy for less as the market rises.
While experts have warned some of the areas could take years to bounce back, others could join a wider city uptick before the end of the year.
In both cases, buyers battling reduced borrowing capacity after two years of interest rate hikes and a growing cost of living crisis have been advised while risky, there may be opportunities if they’re willing to look longer term.
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PropTrack data released on the weekend showed median house values fell in about 110 Melbourne suburbs, but by no more than 2 per cent in 78.
But there were bigger margins along the city’s urban fringe, with Lang Lang’s $668,200 median falling $39,000 (5.6 per cent) and Koo Wee Rup’s $691,800 typical house dropping$35,000 (4.8 per cent) — the biggest reductions by percentage.
Six of the next 10 biggest reductions in median value were recorded across the Mornington Peninsula.
Hastings was the worst hit, with a middle-of-the-road house in the suburb losing 5 per cent of its value, about $35,000, to fall to $666,500.
Tallon Estate Agents agent Dominic Tallon said the suburb, the most affordable pocket of the Mornington Peninsula, had been hit hard by interest rate rises and land tax changes that had combined to significantly reduce first-home buyer and investor demand.
“And that’s caused an impact on house prices,” Mr Tallon said.
“They had been our biggest buyer pool and they just weren’t there last year.”
However, he believed things were beginning to improve there as a growing number of buyers now believed interest rate hikes were over.
“At open homes on Saturday, I have never seen so many first-home buyers coming through,” Mr Tallon said.
If they remain elevated this week, he said he was expecting demand for the suburb’s more affordable homes could pick up fairly quickly.
Rosebud was next, with a more modest 4.4 per cent reduction but a higher median house price making its $761,900 typical buy-in cost today a $35,000 discount on a year prior.
Belle Property Rosebud director Grant McConnell said parts of the Peninsula had come off about 5-10 per cent in the past 12 months, with the reductions largely driven by the area’s high prevalence of holiday homes.
“With increased land tax and interest rates, there’s a glut on the market — and that will continue into the new financial year,” Mr McConnell said.
While he estimated there would be a 12-18 month delay in prices turning a corner, with further falls still possible, the agent noted buyers with a long-term view could do well this winter with their pick of homes and most vendors likely to have to negotiate.
“For a $2m home you could be saving $150,000 now, and there will be listings through winter this year,” Mr McConnell said.
Prominent buyer’s advocate Cate Bakos said while the outlook for Melbourne was good, many suburbs on the Mornington Peninsula’s home values had reached an irrational high in the pandemic’s lockdown era and were now pulling back.
“The Mornington Peninsula will recover eventually, but I wouldn’t say prices will bounce back,” Ms Bakos said.
“We’d need another Covid for them to experience that unprecedented growth we had a few years ago.”
She said buyers hoping to see things turn around sooner might be better off looking to outer fringe areas like Lang Lang and “mortgage belt” suburbs, where falling home values were not a surprise — and very likely to change direction with an interest-rate cut.
Examples include Wandong and Beveridge in Melbourne’s north, which were the 10th and 11th poorest performers in percentage terms, and both very much impacted by reductions to borrowing capacity.
“But a lot of them have been hit by borrowing capacity falls,” she said.
“But they will be the first to move up once we have interest rate cuts.”
However, Ms Bakos’ noted buyers looking for an opportunity among the suburbs that struggled in the past year might be best to look at areas like Brooklyn where the $773,700 median value fell 4.3 per cent.
Essendon North, down 3.1 per cent at about $1.212m, and Maidstone, where values have fallen 2.8 per cent to $874,200, were also of note according to the professional homebuyer.
The reason being they had traditionally been areas where new homes being built had boosted the median price, but could be losing ground today as older homes that had depreciated in value accounted for a larger chunk of the market.
“And I think there could be an opportunity to add value over time,” Ms Bakos added.
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Originally published as PropTrack: Melbourne home prices falling in 110 suburbs, expert reveals where to buy
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