Home values declined in a third of suburbs. Here’s where they fell most

Home values in one in three suburbs around the country are falling, data shows, due to interest rates staying higher for longer and more buyer choice.

Declines are expected to spread to more postcodes during the spring selling season as long as rates remain high and more homes hit the market, experts say.

The proportion of suburbs recording declines have almost doubled since last spring, from 15.7 per cent in the three months to October 2023 to 29.2 per cent in the three months to August 2024, according to CoreLogic data.

Victoria accounted for most of the declines, with 79.1 per cent of Melbourne suburbs, 73.8 per cent of regional Victorian suburbs and every suburb in the Mornington Peninsula down in the past quarter.

Peninsula postcodes dominated Melbourne’s top 10 declines, with Crib Point leading the way, falling 6.7 per cent to a median home value of $747,198. Neighbouring suburbs followed, including Bittern, down 5.5 per cent to $857,669, and Tootgarook, down 5.3 per cent to $929,771.

Home values in a quarter of Sydney suburbs (25.9 per cent) fell, along with 43.1 per cent of suburbs in regional NSW. Behind Melbourne, Sydney had the biggest reversal – only 3.8 per cent of its suburbs were falling a year ago.

A string of inner west suburbs led the top 10 falls in the Harbour City. Rodd Point posted the largest fall, 8.1 per cent to a median of $3,187,308, followed by Concord (down 5.2 per cent), Concord West (down 4.7 per cent) and Enfield (down 4.6 per cent).

Elsewhere, more than half of the suburbs in Hobart (54.3 per cent), Darwin (51.2 per cent) and Canberra (51.6 per cent) posted declines.

CoreLogic economist Kaytlin Ezzy said increased supply and higher interest rates were pushing more suburbs into price declines.

“Supply and demand in those markets, especially in Melbourne and regional Victorian, have seen above-average levels of listings. That is putting downward pressure on values,” Ezzy said.

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“The affordability is another factor. Fewer people are buying properties. We’ve seen such a strong increase in property values in the past couple of years, and when you couple that with the high interest rate environment, those who were trying to enter the market have dropped off, or are considering more affordable alternatives further afield.”

She said higher-priced segments of the markets in each city were leading as they steered price cycles, and more suburbs would follow as long as rates remained high and more homes hit the market.

“You would expect that pace of growth would ease at a national level and that would naturally translate into more suburbs declining in value,” Ezzy said. “We’re starting to see it emerge in Sydney and pockets of regional NSW, and also starting to see early signs of it in Brisbane and Adelaide.”

Rob Curtain, managing director at Peninsula Sotheby’s International Realty, said the lack of supply had meant lower sale volumes in the Mornington Peninsula had masked the depth of the decline that would materialise in coming months.

“We’re definitely going to have more property on this spring than we’ve had in the last five or six years,” said Curtain. “If you’ve got something special, it will do well. But if it’s run-of-the-mill, it will be much more difficult.”

But the suburbs of Crib Point, Bittern and Tootgarook had led the declines because they were “mortgage-sensitive areas”, he said.

Curtain said that for the first time in more than decade, buyers might have the upper hand.

“For a good 15 or 16 years, it’s been a very strong consistent property market … for the first time I think it’s fair to say buyers have some level of control of where prices are going,” he said.

BresicWhitney chief executive Thomas McGlynn said Sydney buyers across all markets of the city were more price-sensitive and had more choice.

“We’re starting to feel the effects of the cost of living. In the sense that all buyers across all categories are willing to pay a fair price, but they are hesitant to extend themselves,” McGlynn said, noting Commonwealth Bank spending data that showed under-45s had been hit hardest.

“Although there is a healthy amount of sales occurring, the overwhelming sentiment is buyers are not willing to push beyond their means,” he said.

McGlynn said more suburbs would post declines if clearance rates continued to fall.

“It’s been a little bit more challenging to bring sales together because a gap has appeared between what buyers are willing to pay and what sellers are willing to sell for,” he said.

“If clearance rates continue the overall downward trajectory for a month or two now, that means more property will stay on the market for longer, which means total listing volume is going to grow.”