Almost half of Melbourne suburb property markets heading backwards

Almost half of all Melbourne suburbs have recorded a drop in property prices in the first three months of the year.

Colourful, brightly painted beach storage shacks on Brighton Beach, with storm clouds in distance.
Brighton apartments were among the 20 worst-performers in the Melbourne property market for the first quarter of 2022. (Image source:

Almost half of all Melbourne suburbs have recorded a drop in property prices in the first three months of the year.

Of the 648 house and unit Melbourne markets analysed by CoreLogic, 305 recorded a slip in values ranging from a fall of 6.4 per cent across houses in the inner-city suburb of Cremorne, to a 0.01 per cent fall across houses in Boronia.

In 2021, Melbourne's property values soared to record highs while supply fell to similarly unprecedented lows. This time last year, Melbourne's housing market had seen property values growing at a rate of 5.8 per cent for the quarter. In contrast, the growth rate this quarter was barely above break even at 0.1 per cent.

After Cremorne, the suburbs hit hardest in the last quarter were South Yarra (-4.8 per cent), Hampton East (-4.5 per cent), Toorak (-4.4 per cent) and Park Orchards (-4.3 per cent).

CoreLogic data showed advertised stock levels were now 5.5 per cent higher than 12 months ago and 4.7 per cent above the previous five-year average.

Melbourne's 20 worst-performing suburbs

Suburb SA4 region Property type Median value 3m change in home value index 12m change in home value index
Cremorne  Melbourne - Inner Houses $1,446,443 -6.4% 4.1%
South Yarra Melbourne - Inner Houses $2,276,063 -4.8% 1.6%
Hampton East Melbourne - Inner South Units $794,023 -4.5% 9.7%
Toorak Melbourne - Inner Houses $5,017,216 -4.4% -3.0%
Park Orchards Melbourne - Outer East Houses $2,082,320 -4.3% 10.3%
Wonga Park Melbourne - Outer East Houses $1,580,264 -4.3% 10.6%
Brighton East Melbourne - Inner South Units $1,258,280 -4.1% 3.2%
Briar Hill Melbourne - North East Units $782,786 -4.1% 5.8%
Carlton North Melbourne - Inner Houses $1,721,076 -3.9% 9.7%
Brunswick West Melbourne - Inner Houses $1,443,226 -3.9% 4.7%
Croydon South Melbourne - Outer East Houses $932,402 -3.9% 10.0%
Croydon  Melbourne - Outer East Houses $992,256 -3.8% 10.0%
Pascoe Vale South Melbourne - Inner Houses $1,269,717 -3.8% 8.1%
Hughesdale Melbourne - Inner South Units $665,470 -3.8% -1.2%
Abbotsford  Melbourne - Inner Houses $1,350,810 -3.7% 6.4%
Brighton  Melbourne - Inner South Units $1,171,491 -3.7% 1.7%
Armadale  Melbourne - Inner Houses $2,558,769 -3.7% -4.6%
Kilsyth South Melbourne - Outer East Houses $998,406 -3.6% 10.0%
Heathmont Melbourne - Outer East Houses $1,111,085 -3.6% 11.2%
Windsor  Melbourne - Inner Houses $1,560,111 -3.6% -2.2%

Michael Fava, Residential Sales Manager at Melbourne Real Estate, said new developments and investors selling-up are contributing to the reduced property value growth and increase in advertised stock levels in those hard-hit suburbs.  

“We are still observing the formation of many new developments in these areas, which is leading to an abundance of supply,” he said.

“With many investors purchasing property in South Yarra, Toorak, and Cremorne over the past decade and noticing a decrease in rental revenue recently, the decision to place their property on the market has been extremely common, further increasing the amount of supply in the area.”

Houses hit hardest

Houses bore the brunt of property value decreases over the past quarter. In 15 of the 20 suburbs recording the largest value decreases, houses fell more than apartments.

Houses in the CBD and apartments in Melbourne's inner-south saw the highest decreases, which CoreLogic Head of Research, Eliza Owen attributed to increased advertised stock levels.

“High-end and inner-city areas are emerging as the first suburbs to experience this shift in market conditions,” Ms Owen said.

“It is likely slightly tighter lending conditions and higher average fixed rates are hitting the very top of housing markets first.

“These same areas are seeing some of the bigger jumps in advertised stock levels too, so as we see new demand for housing in these areas decline buyers have more choice, more time for decision-making, and more power at the negotiating table,” she said.

As the housing market cools across Melbourne’s inner city and east, the periphery of the metropolitan area is experiencing thriving market conditions. Units across the suburb of Wyndham Vale saw the strongest quarterly increase of Melbourne house and unit markets, at 6.7 per cent.

While city prices are largely stagnant, regional Victorian housing values continue to increase.

Tim Lawless, Head of Research at CoreLogic, said the continued demand for coastal living and low inventory levels in these areas were the driving factors.

“Demographic tailwinds, low inventory levels and ongoing demand for coastal or treechange housing options are continuing to support strong upwards price pressures across regional housing markets,” Mr Lawless said.

Buyer hesitancy

Data released by SQM Research showed Melbourne had the largest increase in advertised property listings at 9.3 per cent in the last month, followed by Sydney (4.1 per cent) and Brisbane (1.9 per cent).

Alongside investors selling up, Wayne Hutchinson, an experienced Real Estate Agent at @realty, said the looming election and interest rate rises are prompting hesitancy among buyers.

“The last state Victorian election saw a spike in buyer activity just after the election,” he said.

“Elections, negative headlines and speculative predictions from banking economists and industry experts regarding future values of the property market have all contributed to lower volume and have ultimately undermined buyer confidence.”

Louis Christopher, Managing Director of SQM Research, shared a similar sentiment, saying that, “Going forward I expect we will shortly enter into a lacklustre period of activity in the lead up to the federal election.

“After that point there will be a looming interest rate rise for the market to consider,” he said.

Mr Lawless said the increase in supply and advertised properties is also translating to less buyer urgency and giving potential buyers the opportunity to negotiate.

Aspiring buyers should make the most of the decreasing prices, Mr Hutchinson told Australian Property Investor Magazine.

“We have seen some lower prices in the marketplace so it could be a very good time for buyers to capitalise on softer pricing.”

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