“Toorak has A, B and C grades … one side of the street is worth 10 per cent more than the other,” he said. “When you jumble it all up you get the wrong message when it comes to the top end.”
Loading
He said Victoria’s property taxes were to blame for the fall in prices and demand for prestige property across the state. “Business in Victoria has been battered across the board, and it has to reflect in real estate,” Morrell added.
Tonya Davidson from Davidson Property Advocates agreed there were “different markets” in Toorak, and that she did not believe that house values in the area had “come back that much”.
“When you’re looking [at sales] over $20 million, you can get stratospheric numbers that easily account for $700,000,” Davidson said. “I think people should sleep soundly in Toorak tonight.”
Prices also fell in Sorrento (down $350,000) and Rye (down $140,000) on the Mornington Peninsula, which Powell said were a result of markets overshooting in price when city buyers escaped there during the lockdown years, chasing a beach lifestyle.
“We saw these types of areas really benefit from that, the remote working, the pandemic era, when we saw families focusing in on the lifestyle coastal pockets, [it] inflated values well above fundamentals,” she said.
Since work patterns have somewhat normalised, the demand for secondary homes has cooled, she said, adding that the Victorian government’s increase in taxes on second homes last year had affected prices for coastal homes and demand from investors.
In Maribyrnong, the median house price fell more than $150,000 following the area’s floods of 2022.
Kevin Nguyen, director at Nguyen Real Estate Footscray, said the area’s sales have not recovered from the event. The new median is $877,500.
Loading
“Sales in that area have jumped down a lot, and it’s really pulled down the median price,” he said.
Powell agreed, and said flooding can have a short-term impact on property markets as potential buyers price in the risk of hazards.
In the unit market, she noted the falls in inner areas such as the CBD, West Melbourne, Carlton and Southbank, attributing them to a retreat in demand from investors.
Units in West Melbourne are down $122,500, and $95,000 in Melbourne’s CBD.
Belle Property Carlton’s real estate agent Scott McElroy agreed. “There’s a high percentage of investors getting out of these buildings. Foreign buyers are getting out of the land tax they’re paying … which is eating into their returns,” he said.
Unit prices in inner Melbourne have plummeted over the last year. Credit: Wayne Taylor
Much of the stock, especially the larger blocks with more than 55 apartments, were not attractive to owner-occupiers, who he said preferred smaller, boutique apartments.
“But even younger people are not wanting to go into these building, as cost of living there is not cheap either – they don’t want to pay $6000 in body corporate,” McElroy said. “[These apartments] are fantastic to rent but if you want to sell, you have to sell to investors and they’re not around at the moment.”
