Melbourne suburbs with fastest falling prices,
A group of wealthy suburbs on Melbourne’s bayside have seen the biggest drop in house prices recently.
Experts say the sluggish market and high interest rates are causing these price declines.
CoreLogic data reveals Albert Park’s median house value dropped by 9% in the three months to October.
This is the largest decrease in house prices across Melbourne during this period.
South Melbourne followed closely with an 8.6% drop, while Port Melbourne saw an 8% decline.
The Melbourne suburbs where prices are dropping most.
Houses
| Suburb | Median Value | Quarterly change % | Annual change % |
|---|---|---|---|
| Albert Park | $2,171,305 | −9% | −7.4% |
| South Melbourne | $1,622,082 | −8.6% | −3.3% |
| Port Melbourne | $1,530,130 | −8% | −6.8% |
| Balaclava | $1,394,418 | −7.6% | 1% |
| Clifton Hill | $1,621,409 | −6.2% | −3.6% |
| Bonbeach | $1,102,710 | −6.2% | −5.5% |
| Somers | $1,304,779 | −6.1% | −10.6% |
| Elwood | $2,090,299 | −6.1% | −0.8% |
| Abbotsford | $1,244,710 | −6% | −0.8% |
| St Kilda | $1,568,259 | −5.9% | −1.2% |
Units
| Suburb | Median Value | Quarterly change % | Annual change % |
|---|---|---|---|
| Malvern East | $658,800 | −6.4% | −7.8% |
| Flemington | $416,777 | −6.1% | −2% |
| Ascot Vale | $587,398 | −5.9% | −2.5% |
| Clifton Hill | $709,435 | −5.8% | −8.7% |
| Caulfield North | $681,306 | −5.1% | −5.4% |
| Essendon | $544,394 | −5% | −2.1% |
| Sandringham | $826,413 | −4.3% | −2.7% |
| Ashwood | $1,002,624 | −4.2% | −1.9% |
| Essendon North | $463,448 | −4.2% | −3.9% |
| Capel Sound | $579,781 | −4.1% | −5.8% |
Balaclava, Elwood, and St Kilda were among the top 10 suburbs with the biggest house price drops.
Their median house values fell between 7.6% and 5.9%.
All six bayside suburbs had median values over $1.3 million, placing them in the top tier of Melbourne house prices.
In the unit market, Malvern East saw the biggest drop, with prices falling 6.4%.
Flemington followed closely with a 6.1% decline, and Ascot Vale saw a 5.9% drop.
CoreLogic’s Eliza Owen explained that Albert Park’s price drop was significant.
She mentioned it was like losing over $200,000 from the median value, which is a big change.
Albert Park is in the high-end market, where values have generally fallen the most this cycle.
Owen added that Elwood experienced similar trends, with both suburbs having house prices above the $2 million mark.
“It seems like the price drops are getting worse right now. The market was fairly stable in the previous three months until July.”
Morrell and Koren buyers’ advocate Matt Cleverdon said Albert Park and nearby areas have seen few sales lately.
This lack of activity could be contributing to the falling prices in those suburbs.
“There is still some caution in the market, and people are waiting for clearer signals,” he explained.
“Buyers are being careful, making sure they don’t overpay, and there is competition for the available properties.”
He added that people want to move, but many don’t necessarily need to move right now.
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Cleverdon mentioned that most properties being sold in the area were former investment properties. These are usually considered lower quality than family homes, so they sell for less.
He added that these suburbs are in the inner city, where people are under less pressure to sell.
Some investors are choosing to sell before the land tax is introduced at the end of the year.
Belle Property Albert Park director David Wood agreed with this view. He explained that in Albert Park, many homeowners own their properties outright and don’t have a mortgage.
For these homeowners, if the market price doesn’t meet their expectations, they are reluctant to sell.
Wood also noted that the increase in unrenovated homes, which were previously rental properties, has impacted the price point.
He described the price falls as a “blip” that the expensive markets will recover from once interest rates decrease.
Clifton Hill and Abbotsford, two neighbouring suburbs in the inner north, also experienced significant price drops.
Their property values fell by 6.2% and 6%, respectively, in the last three months.
Nelson Alexander Fitzroy agent Roland Paterson said these suburbs were facing similar market conditions to the bayside areas.
He pointed out that well-presented apartments are selling quickly, as buyers are unable to afford terrace homes.
However, unrenovated terrace homes have seen a drop in price of about 10%.
Paterson also mentioned that fewer family homes are being listed, meaning there are fewer large sales to support the market.
“When there are fewer family homes available, it creates a bottleneck in the market,” he explained.
He also said many couples are looking to upgrade but there aren’t enough suitable homes for them.
While prices are falling, Paterson believes that property values had become inflated during the COVID-era boom.
“When you look at what people paid in 2020 and 2021, it’s often hard to justify the current value,” he said.
Owen said that expensive suburbs tend to have more volatile prices and often lead market downturns.
She believes high interest rates, which reduce borrowing power, may be affecting potential buyers’ ability to afford these homes.
Owen added that even in high-end markets, if the economy weakens, buyers, like executives, may be less able to pay.
She concluded that these markets are not immune to softer economic conditions.
