Melbourne suburbs where house prices rose – and fell – the most

Home buyers in Melbourne’s blue chip suburbs can now pick up a relative bargain as the city’s property prices fall, but those looking for their first home in more affordable neighbourhoods may have to pay more.House prices in some ritzy inner-Melbourne hubs fell by double figures over the 12 months to June, Domain’s latest House Price Report, released last week, revealed, while in some outer mortgage belts, prices were on the rise.This soaring outer-suburban market is now making it tougher for first-time buyers to get a foothold, experts say, even as wider house price falls are expected.Toorak recorded the largest decline in Melbourne, a fall of 26.6 per cent over the year to June to a $3.67 million median, Domain data showed, while Balwyn (minus 14 per cent) and South Yarra (minus 11.7 per cent) also fell.That compared to Riddells Creek in the outer north-west, where prices soared 22.5 per cent to $1.09 million. There were also strong rises in Melton (15.8 per cent), Oakleigh South (15.3 per cent), Frankston North and Westmeadows (14.4 per cent each) and Kurunjang (13.9 per cent).Unit prices fell most in Brighton (minus 21 per cent), Fairfield (minus 17.2 per cent) and Melbourne CBD (minus 17 per cent). The middle ring suburb of Chadstone had the largest unit price jump of 29.6 per cent.Overall Melbourne’s house price fell by 3.1 per cent in the June quarter, to a median $1.04 million.Domain chief residential economist Dr Nicola Powell said a shock to the market from rising interest rates and the added cost of living meant high-priced areas were taking the initial hit.“Really, this is the playbook we usually find at the start of a downturn,” Powell said. “Expensive inner and blue-chip areas are feeling the brunt, while the less expensive areas are still holding up.”Suburbs in the middle and outer areas would be hit by the cooling market in coming months, though not all would experience price falls.“A downturn doesn’t mean all suburbs come down in price; it can just mean a slowdown in the pace of their gains,” Powell said.Natalie Weeks, senior mortgage broker with Loan Market Rowville, said first home buyers were finding it more difficult to get a loan as interest rates rose.“From the first home buyers I’ve been working with, they have been finding it a bit more difficult … If they qualify for the 5 per cent deposit scheme, then they do that to help them get a leg up,” Weeks said.Some were relying on the bank of mum and dad, or on family to be a guarantor on a loan, to help them buy their first home, she said.Alicia Alpuim bought her first home, a two-bedroom townhouse, in April. The 29-year-old school counsellor had been looking in Rowville, but found she was priced out of the area.Alicia Alpuim bought in Dandenong North after being priced out of Rowville.Joe ArmaoAlpuim settled for nearby Dandenong North, buying close to where she had been living with her parents. She saved for six years for a 20 per cent deposit.House prices in the outer suburb of Rowville rose 8.9 per cent to a $1.12 million median over the year to June, while Dandenong North’s were up 5.9 per cent to $810,000.It had been daunting applying for a mortgage as someone on a single income.“It wasn’t easy at all,” Alpuim said. “I obviously couldn’t afford a house, so a townhouse was the best option for me compared to an apartment.”Alpuim is now weighing up her options of whether to rent out her second bedroom to help cover costs.On the opposite side of the city, first home buyers were still competing with investors, especially interstate buyers looking to invest through self-managed superannuation funds while they were still able, before federal investor tax changes.Barry Plant Melton partner and auctioneer Ned Nikolic said that competition was helping buoy prices in the area.“When Melbourne’s prices fall, Melton’s tend to stabilise,” he said. “Melton’s not going to go down much.”AMP chief economist Dr Shane Oliver said higher interest rates were pushing buyers to look in more affordable areas, adding to competition.“As rates go up, it does make property less affordable, and higher repayments pushes people to the lower end of the market,” Oliver said.Economists, including Oliver, predict house prices will continue to dip through 2026, until there is a cut to interest rates, which is forecast for some time in 2027.“Once the downturn bottoms out then the lower end that held up better won’t see prices go up by as much,” Oliver said.More:Melbourne house pricesProperty marketProperty pricesVictoria residential propertyAuctionsProperty listingsFrom our partners