*updated May 2024
In 2024, Melbourne’s property market is a mix of promising growth and cautionary tales, especially in certain suburbs. If you’re asking, “What are the riskiest suburbs to buy property in Melbourne?” this article is here to provide insights.
We will explore the suburbs with the steepest price falls, the wider implications of these trends on the property market, and the potential risks for buyers and investors.
Specific focus will be given to the suburbs that have experienced significant declines in property values, as well as the overall health of Melbourne’s property market, considering recent economic challenges and the impact of the COVID-19 pandemic.
Recent Price Trends in Melbourne’s Property Market
Melbourne’s real estate landscape in 2024 is dynamic. After a significant rise in property prices by 15.8% during 2020 and 2021, the market saw a downturn with housing values falling by 7.9% from their peak in March 2022 to January 2023.
However, since January 2023, prices have consistently risen by 4.5%, indicating a potential turnaround.
“This recovery, though, comes with its own set of challenges. The city has weathered the economic fallout of the COVID-19 pandemic, extended lockdowns, a series of interest rate hikes, and the lowest level of consumer confidence in decades.”
These factors have collectively influenced the property market dynamics, leading to a cautious but hopeful outlook for the future. With this backdrop, Melbourne’s property market is at a crucial juncture, where understanding the recent price trends becomes essential for anyone looking to invest in the city’s real estate.
Suburbs with the Steepest Declines
Identifying the riskiest suburbs in Melbourne is essential for informed property investment decisions in 2024. Certain suburbs have witnessed the largest falls in house and unit prices over the past year.
For instance, Windsor experienced a significant -14.1% fall in median house prices, while St Kilda saw a -12.4% decline. South Melbourne, Malvern East, and Middle Park also faced notable drops in house prices, ranging from -10.9% to -12.2%.
Table 1: Decline in Median House Prices
| Suburb | Decline in Median House Prices (%) |
|---|---|
| Windsor | -14.1% |
| St Kilda | -12.4% |
| South Melbourne | -12.2% |
| Malvern East | -11.3% |
| Middle Park | -10.9% |
In the unit market, the scenario is equally concerning. Suburbs like Kew East and Hawthorn East have seen steep falls in unit prices, plummeting by -18.5% and -18.1%, respectively. Other suburbs like Ascot Vale, Hawthorn, and Moonee Ponds also reported significant drops in unit prices, with declines exceeding -16%.
These substantial price falls point to a market adjustment, underscoring the importance of cautious investment in these areas. Understanding these dynamics is key for potential buyers and investors, especially those considering properties in these specific Melbourne suburbs.
Table 2: Decline in Median Unit Prices
| Suburb | Decline in Median Unit Prices (%) |
|---|---|
| Kew East | -18.5% |
| Hawthorn East | -18.1% |
| Ascot Vale | -17.1% |
| Hawthorn | -16.4% |
| Moonee Ponds | -16.3% |
Population Growth and Infrastructure Strain
Melbourne’s population surge poses significant challenges for the city’s infrastructure. The population is forecasted to increase by around 500,000 over the next five years, and by a staggering 1.7 million since the start of the century.
This rapid growth, equivalent to adding two cities the size of Hobart in just five years, strains Melbourne’s public transport and roads, leading to overcrowding and congestion.
“The rental market feels this impact too, with a historic low in vacancy rates and a 23.1% soar in apartment rents over the past year, making it tough for tenants to find affordable living spaces.”
For those interested in exploring more affordable options, understanding where the cheapest rentals in Victoria are can be beneficial.
As Melbourne overtakes Sydney to become Australia’s largest city by population, the strain on infrastructure intensifies. Public transport struggles to keep up with demand, leading to delays and overcrowding. Roads are increasingly congested, complicating daily commutes.
To mitigate these challenges, the Victorian government commits to substantial investment in public transport infrastructure. This rapid growth and the resultant strain on city infrastructure are crucial considerations for anyone looking to invest in Melbourne’s property market.
Market Recovery and Future Outlook
The Melbourne property market is showing signs of stabilisation, with a slight drop of 0.5%, or $5,017, in house prices during the March quarter, indicating a possible market floor.
Despite this, experts caution that a definitive confirmation of this trend requires more time. Melbourne’s median house price, currently at $1,023,116, is still 6.5% below its December 2021 peak but 16.1% higher than pre-pandemic levels. This suggests a resilient market that has withstood recent economic upheavals.
According to a report by Urban Developer, Melbourne is set to become the nation’s fastest-growing city and is projected to overtake Sydney as the biggest capital in Australia by 2030.
The Centre for Population’s latest projections indicated a gradual increase in population growth, particularly from 2023‑2024 onwards, with Melbourne expected to become the nation’s largest city in 2029‑2030 with just over 5.9 million people.
“Mornington Peninsula and Inner East, are recovering, a typical pattern in real estate cycles. This rebound in expensive areas, coupled with returning buyer confidence and a pause in interest rate rises, points towards a market bottoming out. “
For insights into the most affluent areas, one might consider exploring where most millionaires live in Melbourne.
However, while house prices show signs of stabilising, unit prices tell a different story. They’ve fallen 4.8% to a $527,828 median, with the steepest drops in places like the Mornington Peninsula according to The Age. This dichotomy in the housing market underscores the need for careful consideration and market analysis before making property investments in Melbourne.
For those looking into rental investments, examining the Melbourne rental properties market is essential.
Learn More: Interested in more options? Our detailed guide to the best suburbs to live in Melbourne is just one click away and complements the insights you’ve gained here.
FAQs on What Are the Riskiest Suburbs to Buy Property in Melbourne?
What are the high-risk suburbs in Melbourne?
The suburbs with the highest burglary rates, indicating potential risk, include Mount Dandenong, Sorrento, East Melbourne, St Kilda, St Kilda West, and Toorak.
What four Melbourne suburbs are blacklisted?
Docklands, South Melbourne, South Yarra, and Caulfield North are blacklisted due to being unfavorable for property investments according to a report by Positive Property.
Which suburbs in Melbourne have dropped in value?
Suburbs like St Kilda, Brighton, South Melbourne, South Yarra, and Carlton North have seen significant drops in house prices, with decreases ranging from 10.4% to 17%.
What suburbs are overvalued in Melbourne?
Crib Point, Somerville, and McCrae on the Mornington Peninsula are considered overvalued, with market conditions indicating a potential decrease in property values following their high pricing.
What are the most undervalued suburbs in Melbourne?
According to industryinsider.com.au discussing Melbourne’s property market, some of the most undervalued suburbs include:
- Albion: Known for its potential and proximity, only 17 kilometers from Melbourne’s CBD, offering a balance of accessibility and tranquility.
- Reservoir: A suburb offering value for property investors or homebuyers.
- Fawkner: Another suburb with untapped potential, attractive for its affordability.
- Frankston: Recognized for its affordability, despite being a coastal area.
What are the up and coming suburbs in Melbourne?
In terms of growth and potential, the top suburbs in Melbourne, as noted by a property market source, are:
- Wandin East
- Wandin North
- Seville
- Gruyere
- Seville East
- Narre Warren South
These suburbs are identified for their significant development and growth prospects.
Which Melbourne suburb has the highest crime rate?
A report on Melbourne’s safety indicates that the suburbs with the highest burglary rates include:
- Mount Dandenong (3767): 8.7 burglary rate.
- Sorrento (3943): 8.2 burglary rate.
- East Melbourne (3002): 8.2 burglary rate.
- St Kilda, St Kilda West (3182): 7.5 burglary rate.
- Toorak (3142): 7.3 burglary rate.
These suburbs are noted for their higher-than-average burglary rates in Greater Melbourne.
What suburb in Victoria has the most crime?
Regarding serious assaults, a crime report highlights that:
- Dandenong is the most dangerous suburb for serious assaults outside of Melbourne’s CBD.
- St Kilda, despite its high real estate prices, records a high number of serious assaults, making it one of the state’s most violent suburbs.
