Where Melbourne home owners are selling their properties now

The number of homes for sale in inner Melbourne has surged in the last 12 months, creating an ideal market for buyers amid weakening property values.

Listings are up 23 per cent in inner Melbourne, relative to 12 months ago, CoreLogic data shows, compared to Greater Melbourne which only saw a 1.1 per cent rise.

But listings numbers have stabilised or even declined in more tightly held areas such as the inner south and outer east, starting to give sellers the upper hand.

It comes as upbeat inflation figures this week prompted several economists to tip a February rate cut, which could support demand for property.

CoreLogic head of research Eliza Owen said there are roughly 400 more properties for sale in inner Melbourne compared to one year ago, and the high supply numbers reflect weaker market conditions.

Owen said the rise in listings has been fuelled by an uptick in investor selling, an oversupply of units and higher turnover rates amid weak buyer demand.

“Home values across Melbourne City are down 3.4 per cent relative to a year ago,” Owen said. “When you see rising stock levels, it tends to reflect slower selling times and an abundance of choice for buyers, which allows them to negotiate a lower asking price, and that ultimately drags down the value of the dwelling market overall.”

While more properties have been put on the market in inner Melbourne, Owen said listings numbers were down in other sought-after areas.

Melbourne’s outer east recorded a 10.6 per cent decline in listings relative to one year ago, while the inner south had a drop of 1.9 per cent.

“It suggests that sellers are responding to that oversupply and are instead choosing to hold on to their property,” Owen said. “In an area like Bayside, where property values are generally more expensive, we’re seeing listings volumes come down.”

Ted Adair, 36, and partner Courteney Boulter, 36, are selling their one-bedroom home in Port Melbourne and hoping to upsize to a larger house in the same area, but have been waiting for the right time – and the right price.

While there are more homes for sale than a year ago, Adair is aware that a weak market which favours buyers will affect his sale price.

“Realistically, what we’re going to sell the house for is going to be less than what it was worth even just a couple of years ago,” he said. “But as long as we’re buying in the same market, it’s not that big of a deal. You’re kind of just trading one asset for another, and if they’re both deflated, then it’s not a big loss.”

Adair, an animator, said while there is more choice around Port Melbourne amid falling property values, high interest rates have restricted the couple’s borrowing capacity.

“We’re trying to get a really solid idea of what’s going to be a realistic outcome for us, and maybe we will have to compromise if we want to upgrade in this market,” he said.

Their real estate agent Fraser Lack, of Biggin & Scott Port Melbourne, said the rise in property listings across inner Melbourne has been bolstered by investor selling and the high turnover rates of apartments.

“A lot of the properties that we are selling at the moment were previous investment properties,” Lack said.

“This has been something that we’ve been very aware of the last 18 months … it’s also a high density area, when you look at the number of units compared to the number of houses in the more suburban areas of Melbourne.”

PRD Real Estate chief economist Dr Diaswati Mardiasmo agreed that a drop-off in investor activity combined with mortgage stress has pushed up listing numbers, but it’s not only restricted to inner Melbourne.

The Mornington Peninsula has recorded a 19 per cent increase in listings relative to the five-year average, CoreLogic data shows.

“We have had an increase in people who used to have holiday homes or have Airbnbs in Melbourne who decided to let go of their property because of the extra [costs],” Mardiasmo said.

“Places like Mornington Peninsula still has that tourism aspect, but it hasn’t really received the kind of buyer attention as it did during COVID times.”

But with potential interest rate cuts on the horizon, Mardiasmo said some vendors may be holding off listing their property for sale.

“Many families are waiting for a cash rate cut, and when you know that potential relief is about to happen, mortgage repayments might be more manageable … and so reasons to sell quickly and to put the house on the market lessens.”