Which Melbourne neighbourhoods offer the most options for home buyers?

Melbourne home buyers have far less choice than they did a year ago, new data shows, as owners hold back from listing their properties for sale in the cooling spring market.

In some parts of the city, new listing numbers are down by as much as 20 per cent compared to spring last year, when COVID-19 lockdowns meant in-person property inspections could not resume until mid-September.

New listings have dropped in every region of the city since September last year, Domain data shows, but the biggest falls are in the outer, more affordable areas of Melbourne.

In the outer east, new listings are down by 20.5 per cent compared to last year.

In the north-east, new listings fell by 17.3 per cent, and in the south-east they fell 17.1 per cent.

Buyers in the outer east and south-east have less choice than they did in the last property downturn, but the picture is mixed. In the inner city, there are 32.7 per cent more offerings than in September 2018, and the inner south is up 21.4 per cent.

Home hunters have fewer options to choose from.Credit: Jason South

This spring rising interest rates, including the 0.25 per cent increase on Tuesday, and falling house prices have spooked sellers.

Owners who had planned to list their homes for sale in spring, usually one of the busiest times of year, are now holding back.

KR Peters Real Estate Wantirna director Peter Nicolls said he believed the spring market would start late, as sellers’ confidence took a hit from falling house prices.

“There is a shortage of stock out there – a big shortage of stock,” Nicolls said. “But because there is a limit on what’s being offered, there is a possibility of more competition for those properties [from buyers].”

Though many home hunters were nervous about coming interest rate rises, some were still in the market bargain hunting, particularly upsizers buying a better home for less than they had planned, Nicolls said.

It’s good news for vendors like Kate Jermyn and her husband Travis Pipe. The couple is selling their three-bedroom Reservoir home in the hopes of buying a larger one further from the city.

They were keen to move somewhere with more trees and a country feel.

Jermyn, who returned to work as a nurse’s assistant after the birth of daughter Bodhi, said she and her husband had been watching the market as it shifted gears but were not phased about falling prices.

Kate Jermyn and Travis Pipe, with daughter Bodhi, aren’t worried about the current market and are hopeful of a sale.Credit: Simon Schluter

“There’s never a right time to sell, but given we are upsizing, with the prices where they are at, it’s a good time for that,” Jermyn said. “I’ve seen that houses have been passing in at auction more, but I’m quietly confident our place will sell because it has period charm, and it is renovated.

“Even if it’s on the market a little longer, they [properties] do move eventually,” she said.

Jellis Craig Reservoir partner Anthony Lapadula, who is selling the couple’s house, said there had been fewer new listings since the market boom last year.

Opportunistic vendors, who were selling to cash in, were no longer in his local market, he said, and those listing good quality, larger family homes were also holding back.

“The heat has definitely come out of the market, it’s definitely softened,” Lapadula said. “There is demand there, but buyer confidence has also come back a bit.”

ANZ senior economist Felicity Emmett said home buyers could expect new listing numbers to continue to fall, as buyers’ borrowing power is squeezed by more interest rate rises – a similar trend to past downturns.

ANZ forecasts house prices to fall more than 11 per cent this year and 6 per cent next year in Melbourne, with interest rates predicted to keep rising until next year before some relief for buyers and sellers alike.

“If prices continue to fall, as we expect, vendors will see what they perceive as a loss if they sell,” Emmett said. “If the next door neighbours sell for $1 million then they’ll feel the pain of taking $900,000 … It will weigh on listings in the year ahead.”