House prices are dropping in nearly 30% of Australian suburbs.
According to recent CoreLogic data, the biggest declines are seen in Melbourne and regional Victoria, where prices have been hit hard.
Although the national housing market still shows growth, rising interest rates and cost of living pressures are slowing it down.
What Are the Suburbs Where Prices Are Falling the Most?
Melbourne and regional Victoria are experiencing the sharpest price declines. In the Mornington Peninsula, for example, prices dropped by 7% in suburbs like Crib Point.
In Ballarat, 100% of suburbs have seen prices fall, and in Geelong, it’s nearly the same at 97.8%.
Meanwhile, Perth stands out as a success story.
In the last quarter, no suburbs in Perth recorded price declines. CoreLogic found that all 302 suburbs in Perth saw prices rise, with Henley Brook leading with a 10.6% increase.
Victoria vs Western Australia
Why Are Prices Falling in Melbourne?
The combination of high interest rates and property taxes in Victoria is making it harder for buyers and investors.
CoreLogic data points to an oversupply of homes, with Melbourne’s total property listings 25% higher than the five-year average.
As more homes are listed, sellers face more competition, which is pushing prices down.
Affluent suburbs such as Box Hill and Canterbury are particularly affected.
In contrast, more affordable areas have been more stable, although pressure remains.
Where Are House Prices Rising and Falling?
Overall, house prices in Australia rose by 1.3% in the last quarter, but nearly 30% of suburbs recorded price falls.
Melbourne leads the decline, with almost 80% of its suburbs seeing drops in house prices.
The Mornington Peninsula is one of the hardest-hit areas, with all suburbs there recording decreases.
Regional areas like Ballarat, where every suburb saw prices fall, and Geelong, with 97.8% of suburbs experiencing declines, reflect how widespread the drops are in Victoria.
Suggested Reading: Where Are Melbourne House Prices Falling?
Are Falling Property Prices a Problem?
Opinions are divided on whether falling property prices are a problem.
For many homeowners and investors, it is concerning, especially for those who bought homes at peak prices.
These buyers may face negative equity, where the value of their home is less than their mortgage. This issue is particularly common in Melbourne and regional Victoria.
However, a recent poll conducted by Everybody’s Home, an organization focused on housing affordability, found that 54% of Australians actually want house prices to fall over the next five years.
This is seen as a way to improve housing affordability.
Among renters, 72% support price declines, and even 44% of mortgage holders are in favor of lower prices. This reflects the broader concern about housing affordability, especially for younger Australians looking to buy their first home.
How Are Buyers and Sellers Affected?
For sellers, the current market is difficult, especially in Melbourne and regional Victoria.
Increased competition from a surplus of listings means many sellers are lowering their asking prices. Ballarat and Geelong are seeing similar trends, with sellers forced to accept lower offers.
For buyers, the situation offers new opportunities. The drop in prices means more homes are now within reach, particularly in once-unaffordable areas like the Mornington Peninsula and Canterbury.
First-time buyers, especially, have more options and better negotiating power.
What Should Buyers Expect as Prices Stabilise?
As house prices begin to stabilise, buyers will find more opportunities in the property market.
This is especially true in suburbs where house prices have dropped, like Canterbury and Crib Point. First-time buyers may now be able to enter areas that were once too expensive.
If interest rates drop in the future, we could see a boost in buyer demand, especially among owner-occupiers and investors.
However, some buyers might hesitate, waiting to see if prices fall further before making a move.
What’s the Future Outlook for Australia’s Property Market?
The future of Australia’s property market will largely depend on several key factors, including:
- Interest rates
- Housing supply
- Demand in different regions
Economists predict that interest rates may fall in 2025, which could lead to a recovery in areas where house prices have dropped, such as Melbourne suburbs and regional areas like Geelong and Ballarat.
If rates stay high, housing affordability will remain a challenge, particularly in areas with oversupply.
However, in markets like Perth, where housing supply is low, property prices are expected to continue their upward trend, driven by strong demand and price growth.
Will Supply and Demand Impact Future Prices?
Supply and demand play a key role in price movement.
- Oversupply in Melbourne: With 25% more homes on the market, sellers are lowering prices to stay competitive.
- Perth’s shortage: Housing supply is 43% below the average, keeping competition and prices high.
Is Now the Right Time to Invest in Perth or Melbourne?
Investing in either Perth or Melbourne depends on market conditions. Perth is seeing strong price growth across all 302 suburbs, driven by low supply and steady migration.
In contrast, Melbourne’s property market is seeing price falls in 80% of its suburbs. High interest rates and property taxes are creating challenges for sellers, but this could present opportunities for buyers looking for a deal.
Either way, keep your eye out on top selling suburbs in your favourite cities to know how the market is reacting.
Comparison of Perth vs. Melbourne Markets
| Factor | Perth | Melbourne |
|---|---|---|
| Supply | 43% below average | 25% above 5-year average |
| Price Movement | Strong growth (10.6% in Henley Brook) | 80% of suburbs in decline |
| Demand | High due to migration | Lower due to high competition |
| Interest Rate Impact | May fuel further growth | Could stabilize or fall further |
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