“Across Melbourne, all prices are coming off their peaks and these falls will ripple across all suburbs – it will take longer to reach the outer suburbs – but it will happen,” Powell said.
Vendors should not panic, she said, as property prices in many suburbs will remain above levels reached before the pandemic hit. Melbourne’s median house price jumped 24 per cent between June 2020 and December 2021.
Economists predict house prices could fall by between 10 per cent and 20 per cent.Credit:Paul Rovere
“Homeowners will still be better off if they bought pre-pandemic, but those that bought at the peak will be in a more vulnerable position if they’re looking to sell now,” Powell said.
St George chief economist Besa Deda said higher mortgage rates were slowing the market and there was worse to come, predicting prices would fall by between 10 and 15 per cent over the next 18 months.
“The downturn in dwelling prices will broaden and deepen,” Deda said. “We anticipate that the RBA will increase the cash rate by 50 basis points [next Tuesday]. We wouldn’t completely rule out 75 per cent.”
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The changing market is making some buyers nervous.
Jellis Craig Eltham director and auctioneer Scott Nugent, who sells in Lower Plenty, said the number of attendees at open for inspections had dropped from more than 10 to an average of 3.5.
“People feel they don’t have to buy right now,” Nugent said. “They’re a little more cautious … a lot of the dialogue we have with buyers is that they’re waiting for the market to soften more.”
For 48-year-old Rocia Silva, who has been searching for a new home in Melbourne’s inner north over the past few months, falling prices have been both a positive and a negative.
Rocia Silva is hoping to buy an apartment or unit somewhere in the inner north of Melbourne.Credit:Justin McManus
Silva has seen prices fluctuate in the suburbs she is looking to buy in, including Brunswick and Coburg, but is worried that lower prices will eventually mean more competition from other buyers.
“For my budget, I’m looking to buy a flat or an apartment,” Silva said. “I’d like to buy, but I don’t know if that’s possible if more people are interested.”
She’s also found many vendors selling privately do not want to accept an offer with a “subject to finance” condition attached.
Her buyers’ advocate Wendy Chamberlain said some buyers were nervous, after a challenging two years when prices boomed.
“It is a little bit of an adjustment that’s happening because the market has changed, people are nervous about rising interest rates and the rising cost of living,” Chamberlain said. “Buyers are also having their money reduced because they can’t borrow as much when interest rates rise.
“Vendors have also realised the market is changing and agents are having conversations, sometimes tough conversations, about prices.”