Source : the age
Toorak’s median house price has fallen 36.8 per cent from its peak, after the suburb recorded its sharpest single-year drop on record.
Higher interest rates, cost of living, changes to the tax treatment of investment properties and a looming Victorian election are being blamed for stopping vendors and buyers in their tracks and pushing prices down.
Toorak’s median house price peaked at $5.8 million in March 2024, Domain data shows, and has fallen more than $2 million to reach a median price of $3,665,000 by the June quarter.
Over the past 12 months to June alone, the exclusive suburb’s median price fell 26.7 per cent or more than $1 million, its steepest annual drop on record.
Though there have been some recent high-profile sales, such as a house that Geelong Grammar School sold to a luxury home builder who transformed it and resold for $17 million-plus, overall fewer top-tier homes have changed hands, meaning median prices at the upper end of the market have become more volatile, causing large swings downwards, experts say.
The Reserve Bank’s recent decisions to hold the cash rate steady may give some reprieve to mortgage holders, but may not be enough to stop further house price falls at the upper end of the market, with governor Michele Bullock warning rates may need to rise again.
South Yarra’s median house price also fell by -11 per cent, or -$471,000 over the year to June.
The suburb is down 21.4 per cent or -$510,000, since its peak in April 2023.
Elsewhere, Balwyn’s slumped -14.2 per cent, Elwood’s -9.3 per cent, and Box Hill’s -10.6 per cent, making up the top five falls in house prices over the 12 months to June.
Each of the three suburbs is down by more than -16 per cent since peaking.
Domain’s chief residential economist Dr Nicola Powell said there were a number of reasons Melbourne’s prestige market had fallen faster and by bigger numbers than in previous downturns.
“We were seeing the market slow down after three rate hikes this year, and that compounded with taxation changes which spooked the market completely … it’s all compounding and compressing house prices,” she said.
Melbourne’s upper end market usually recorded deeper declines in a downturn, with buyers and sellers more affected by a fall in borrowing power and mortgage serviceability, Powell said.
The top end leads both the downturn and the recovery of the market, she said.
“Historically premium suburbs recover first and that reflects buyer and seller confidence returning,” Powell said.
Morell and Koren director and prestige buyer’s advocate David Morell said buyers and sellers at the top end of town were sitting on their hands.
“What we’ve seen is effectively since the budget the market has stopped,” Morell said. “No-one wants to go to the market when there is no market.”
With more money than most, sellers were able to wait it out until they got the price they were looking for.
“What happens in this market is opportunistic buyers make an offer and then the vendor throws their toys out of the pram and doesn’t want to sell,” he said.
Many deals are being done off-market as vendors test the market, and the depth of buyers’ pockets, Morell said.
Forbes Global Properties director Michael Armstrong agreed.
“So far for the year half of the transactions have been off-market,” Armstrong said. Those properties that were selling had terms attached, like a longer settlement.
“Terms are an important part of bringing deals together,” Armstrong said. “I think we’ve got a lot of people who would love to do things at the moment but the commodity that’s in short supply is confidence, not capital.”
Buyer and seller sentiment was being affected by the political landscape – both at state and federal level as an election was on the horizon in Victoria and the federal budget changed tax arrangements for capital gains and negative gearing.
“Once that settles people will get off the fence,” Armstrong said. “People are in wait-and-see mode.”
In Melbourne’s high-end bayside suburbs like Elwood, more expensive properties were taking longer to sell, than apartments which had been snapped up by investors who had been getting into the market before rules for buying through self-managed superannuation funds changed.
Belle Property Brighton’s Sam Inan said vendors of top-tier properties needed to find middle ground with buyers before they sold.
In many cases, buyers were making lowball offers before negotiating a sale.
“They are lowballing, but it’s not always strategically, they’re just seeing what the vendor will come to,” Inan said.
“They won’t offer asking price, they offer low and then find a middle ground – if the owners are motivated, they’ll find a middle ground pretty quickly,” he said.
