Melbourne suburbs where home values just dropped $100,000 or more
Most family homes in Melbourne have lost more than $100,000 in value in the past three months, while suburbs in the east and southeast have lost almost 7 per cent in value.
House values in Blackburn, Beaumaris and Mont Albert fell 6.9 per cent in the June quarter, while properties in the Melbourne market fell 2.6 per cent, new Cotality data shows.
Units have been hit even harder in Murrumbeena, where the average value has fallen 7.1 per cent since March; Kew, Elsternwick and Carnegie fell 5.5 to 5.6 percent over the same period.
Cotality head of research Tim Lawless said the city’s already “vulnerable” market was feeling the impact of both rate increases and changes to negative gearing and the capital gains tax cut announced in the May budget, with Melbourne’s average property value at $808,486 – well below Sydney ($1,265,608) and below mid-sized cities such as Brisbane, Adelaide and Perth.
“I think the federal budget hangover adds some additional fuel to an already very fragile and weak market,” he said. “And highly pessimistic consumer confidence is another.”
Lawless thought the impact was concentrated in areas with values well above the Melbourne median for both housing and unit markets, indicating greater sensitivity to interest rate rises for buyers of family homes and senior flats.
“The expensive markets seem to be experiencing the biggest downturn at the moment,” he said, noting that affordable entry-level homes were likely softening the impact on the overall Melbourne median.
Tonya Davidson, the buyer’s attorney, said it was clear that homes at the higher end of the market were bearing the brunt of the lack of confidence.
“If we look at the landscape as a whole, it’s a buyer’s market,” he said.
“There is a large percentage [prestige vendors] “There are those who are pressing pause to wait and see, and there are others who are shelving their plans altogether because it doesn’t make sense for them right now.”
Fletchers Blackburn director Ben Williams said the decline in Blackburn’s value matched the decline he had seen over the past three months and he was confident other agents in the eastern suburbs would experience similar impacts.
“Over COVID the value of Blackburn and Box Hill has probably increased much more than the rest of Melbourne,” he said. “So when it transforms… it’s also easier for it to drop to a larger percentage.”
Williams thought the market had started to cool in November as expectations grew that interest rate hikes were on the horizon in 2026 due to persistently high inflation.
“Once this belief became popular, we saw a relaxation in the market,” he said.
“Then we had three interest rate hikes this year, which, in effect, pushed real estate prices back.”
Davidson thought a continued downturn would have an impact on the real estate industry as a whole, particularly at the higher end; Because agents who started their careers during the house price boom experienced selling in a down market for the first time.
“When you start a recession, you develop some pretty solid skills,” he said, noting that agents who know how to explain the market to sellers and help them set a fair price will continue to be successful.
Lawless said another rate hike this year would put further downward pressure on a “sensitive” market, but noted that the ANZ-Roy Morgan consumer confidence index had been on an upward trend in recent months after reaching a record low in March this year.
“If we definitely see some geopolitical tensions returning, that would help bolster confidence,” he said.
“But I don’t think that will be enough to get confidence anywhere near optimistic territory. For that to happen, we need to see domestic economic conditions and inflation improve.”
Williams thought Blackburn and other areas that appeared to be hardest hit by interest rate rises would recover almost as quickly once the Reserve Bank decided it was safe to cut interest rates again.
Meanwhile, he said a revival of confidence could mean buyers are adjusting to the new normal and taking advantage of lower prices.
“This is what we noticed during open inspections last weekend: there were only a few other receivers on the field, a few more people were getting ready to put their hands up,” he said.
“Maybe we found a new level and slowly a different wave of buyers is coming.”
