Almost a third of suburbs see property prices fall

The past three months have seen some heady capital growth in a few cities but a surprisingly high proportion of 3,655 suburbs analysed across Australia are actually in decline.

Weighted down by Melbourne, regional Victoria and the smaller capital city markets, almost 30 per cent of suburbs had their property prices slip backwards since the midway point of the year.

Melbourne (79.1 per cent) and regional Victorian suburbs (73.8 per cent) made up the majority of falls over the quarter, according to CoreLogic data released Wednesday (11 September). Values also decreased across more than half of the suburbs in Hobart (54.3 per cent), Darwin (51.2 per cent), and Canberra (51.6 per cent).

While there’s no prizes for guessing Perth recorded the most growth, the fact not a single suburb in the Western Australian capital lost value was still a remarkable outcome.

CoreLogic Economist Kaytlin Ezzy said quarterly value declines are becoming more common as high interest rates, cost of living and affordability challenges continue to bite.

“While values are still rising at the national level, albeit at a slowing pace, beneath the headline figure, we're starting to see some weakness, particularly in Victoria.

“In Melbourne, declines were most concentrated in more affluent regions, with all suburbs in the Mornington Peninsula recording decreasing values, while just one suburb in the Inner-South (Carrum) and three suburbs in the Inner-East (Box Hill, Deepdene, Canterbury) saw values rise over the quarter.”

A similar pattern played out in regional Victoria, with Ballarat (100 per cent), Geelong (97.8 per cent) and Bendigo (89.3 per cent) recording the highest concentration of falls.

Ms Ezzy noted that this fresh view of the data highlighted a creeping weakness in demand, and the variation in market conditions.

“Nationally the portion of suburbs in quarterly decline was 29.2 per cent in August, which has risen from 17.2 per cent a year ago.

“Behind Melbourne, Sydney has seen the biggest increase in the share of suburbs in decline over the past year, from 3.8 per cent to 25.9 per cent.”

“At the other end of the scale is WA; of the 146 suburbs analysed across regional WA, 127 recorded a quarterly rise in dwelling values, while all 302 Perth suburbs saw values rise.”

“This data shows a remarkable turnaround in the Perth market. In the three months to September 2022, 60.1 per cent of Perth suburbs were in decline. In the three months to August 2024, there was not a single suburb analysed where prices had fallen.

"Across Perth, value increases ranged from a 1.8 per cent rise in Marmion in the city's North-West, to 10.6 per cent in Henley Brook in Perth's North-East."

Sellers in Victoria face stiff competition when trying to offload a property.

Supply levels vary markedly from region to region, with total listings in Melbourne about 25 per cent higher than the previous five-year average, while total listings in Perth and Adelaide are down on the five-year average by more than 40 per cent, driving competition and prices to record levels.

Sellers traditionally prefer to list their properties for sale in spring when their gardens look their best and buyers are awakening from the cooler months. But heading into the spring selling season, there is no guarantee that buyer numbers will rise to meet the seasonal uplift in listings in the more subdued property markets.

Eleanour Creagh, Senior Economist, PropTrack, said new listings volumes continue to trend higher and are set to surge even higher in the coming weeks as more properties hit the market throughout the selling season.

“The stronger new listings environment has resulted in more choice for buyers, with the total number of properties advertised for sale having increased from this same period last year.

“Buyers are taking advantage of the increase in choice and year-to-date preliminary sales volumes Australia-wide are 10.5 per cent higher than the same period in 2023.

“With more choice for buyers as well as a high probability interest rates will begin moving lower next year, it’s pointing to a busy spring selling season ahead, but results will differ city to city.”

Ms Creagh said there were a few reasons conditions in Melbourne have been soft.

“Construction rates relative to population growth in Victoria have been somewhat balanced compared to other parts of the country.

“Higher property taxes in Victoria are also likely to be playing a role - increases in taxes on investment properties have made owning a rental property less attractive on a relative basis.

“These policy changes have also deterred investor purchase activity, and Victoria is not attracting the same uplift in new lending to investors as other states.”

She added that sitting in the middle on the national spectrum was Sydney, where some parts of the city are seeing large increases in the volume of stock on market while other areas continue to see demand outpacing the flow of listings hitting the market with total stock levels remaining close to historic average levels.

Declining prices not necessarily bad news

For many Australians, even a majority, will take some succour from news that property prices in some areas at least are retreating.

Research commissioned by Everybody’s Home, an organisation dedicated to tackling the housing crisis, found from a poll of 2,000 Australians that more than half (54 per cent) want house prices to go down over the next five years, while one in five (21 per cent) want prices to increase.

Even people with mortgages indicated they want to see house prices come down, with two in five (44 per cent) supporting a drop, compared to one in four (28 per cent) wanting prices to rise. Seven in ten (72 per cent) renters want house prices to fall.

Much of the concern around rising property prices comes from concerns around young people being able to afford a home. Four in five (84 per cent) are worried about housing affordability for young Australians, while two thirds (67 per cent) say the cost of housing is causing them stress.

Everybody’s Home spokesperson Maiy Azize said Australia’s runaway home prices are so out of reach for so many voters that most want to see them come down.

“It’s a tired trope that homeowners want house prices to keep rising; rents and mortgages have gone through the roof and there’s only so much people can afford to pay.

“Most voters believe expensive housing is widening the gap between the rich and poor and making it harder to live near the jobs they want and we all rely on.

“Scrapping investor handouts would make housing cheaper and fairer for more Australians.

“Negative gearing and the capital gains tax discount push up housing costs and make our country more unequal.

“Most voters don’t even receive these handouts yet they’re paying the price, losing billions of taxpayer dollars each year to line the pockets of investors.

“The tens of billions of dollars we are set to lose over the next decade to investor tax breaks could build social housing that we desperately need,” Ms Azize said.