Toorak,South Yarra and Hawthorn recorded the steepest annual declines in the city — down 17.1 per cent,15.4 per cent and 15 per cent respectively,the latest Domain House Price Report showed.
House prices are now much lower in exclusive suburbs such as Hawthorn.Stephen McKenzie
Domain chief of research and economics Dr Nicola Powell said Melbourne’s richest suburbs tended to be the first and worst hit in housing downturns,albeit the downswing has started to show recent signs of stabilising and Melbourne’s house price edged up 0.7 per cent over the December quarter.
“They see greater declines but they see higher price hikes when the market moves into the next stage,” she said. “Higher-priced markets are more vulnerable to a deterioration in borrowing capacity.”
PRD chief economist Dr Diaswati Mardiasmo agreed the threat of rising rates was spooking buyers in Melbourne’s affluent suburbs.
“Because they tend to be in the millions price range,you have to think twice about how much you put on a deposit and what the repayments will be,” she said.
Marshall White director John Bongiorno said the slowly increasing rates were scaring off sellers of more expensive homes,as well as buyers.
“I think that the commentary around the market and the economic impact of interest rate rises has scared a lot of people off selling,” he said.
“It does have the impact of pushing people into a backseat role of watching and waiting.”
Bongiorno said he was yet to see many sales by owners who could not afford to service their loans — instead,deaths,divorces,or the need to upsize were causing properties to change hands.
“We’re not seeing any signs of people needing to sell because of interest rates,” he said. “Most of the selling is out of necessity.”
Even after prices fell,they remain out of reach to many Melburnians. Toorak’s median was $4.738 million,South Yarra’s $1.87 million,and Hawthorn’s $2.252 million.
Aspirational suburbs like Fitzroy North,Brunswick and Northcote would become more attainable to young professionals during the downturn,Mardiasmo said.
Price falls were more constrained in those suburbs,however,and ranged from about 6 per cent to 1 per cent.
“It matters more in those mid-range suburbs,” she said.
“A fall in middle or more affordable suburbs makes people think:‘Hey,maybe I can get in there now and broaden my search’.”
Northcote renter Allie Harris was one such buyer who had adjusted her expectations following the softening in house prices in the suburbs around her home.
Northcote renters Allie Harris and Owen Davey were considering buying in suburbs they’d previously ruled out.Penny Stephens
“It feels like it’s becoming a little bit more affordable to get into the areas we’d have loved to get into but had given up on,” she said.
That didn’t mean it had been an easy search,though — Harris and partner Owen Davey said they had been interested in few recently listed homes,while looking in areas such as Fitzroy North,Northcote,Brunswick and Brunswick East.
“It’s been about four months of looking,” she said. “It’s been challenging,there hasn’t really been a huge amount on the market. That’s partly because of the Christmas period.”
Harris and Davey were looking for a fixer-upper — the couple were fond of taking on renovation projects and felt comfortable with their ability to secure tradespeople and materials to complete the job,thanks to Harris’ interior design business.
The couple were confident they could secure materials and tradespeople to work on a renovation.Penny Stephens
Jellis Craig Northcote agent Nigel Harry said Harris would benefit from a trend away from homes in need of renovation,caused by the trades and materials shortage.
“We’ve done a complete 180,” he said. “Turn-key homes are what people are looking for and are willing to pay for.
“I think there are really good buying opportunities for people who are willing to get their hands dirty and do a renovation.”
Elsewhere,affordable suburbs,like those on the city’s fringe,are likely to avoid large price falls,Powell said.
Prices rose in a mix of suburbs,including Gisborne on the fringe of the city,Alphington and new suburb Deanside. Their medians lifted 25 per cent,24.1 per cent and 19.6 per cent,respectively.
“We could see a pullback in all price segments but I think we’ll see those more affordable properties hold up better,” she said. “They’ll hold up better compared to middle and upper-priced suburbs due to affordability and lower buyer capacity.“