The Melbourne houses selling for hundreds of thousands of dollars less

Melbourne house buyers could pay six figures less for some family homes than they would have in a hotter market, as property prices fall.

And some multimillion-dollar homes are trading at million-dollar-plus discounts.

Domain’s Forecast Report FY2027 this week predicted house prices in Melbourne would fall between 4 and 8 per cent in the coming financial year, and unit prices by up to 3 per cent.

But some sellers are already adjusting their hopes by double digits compared with last year, albeit not all sellers have the same experience and some properties remain hotly contested at auction.

This is on the back of three consecutive rate rises since February, and the grandfathering of negative gearing and reduction in the capital gains discount announced by the federal government in the May budget.

Property Home Base founder and director Julie DeBondt-Barker, pointed to a recent sale in Mount Eliza, on the Mornington Peninsula, where a five-bedroom house sold for $1.4 million in April – $280,000 less than the $1.68 million it sold for in October 2023. That is a fall of more than 16 per cent in under three years.

The home at 44-46 Claremont Street is on a large block, has been recently updated and backs onto Mount Eliza Regional Park. It was on the market for 122 days before selling.

DeBondt-Barker thought recent sales such as Claremont Street suggested some areas had already fallen as much as the high end of Domain’s forecast for the new financial year, but warned those holding off from buying that the falls could be temporary.

“I can’t imagine it falling more,” she said. “For whatever reason, it’ll wake back up, and be off and running again … And it goes up further than it went down.”

VicProp Brunswick and Coburg agent Hamza Ali noted a recent auction in Fawkner, in which a three-bedroom house sold for $955,000.

The home at 144 Lorne Street sold for $75,000 more than the top of its $800,000 to $880,000 price guide, but less than the $960,000 to $1,050,000 expression of interest guide it had with a previous agent in April.

“The price they wanted was the six-month-ago price,” he said. He thought it would have sold for about $1.1 million at the start of the year.

“It’s a tricky market. But I believe if you’re placing them well, being open and honest with vendors, and they want to sell, they can still sell well,” he said.

At the higher end of the market, a five-bedroom, five-bathroom mansion in Strathmore advertised with a price guide of $5.7 million to $6.2 million sold for $5.3 million earlier this month, after passing in at auction at $5.25 million.

While the eventual price is still beyond the reach of most buyers, the vendors of 37-39 Bournian Avenue took a $200,000 haircut on their $5.5 million reserve, already $200,000 lower than the bottom of the guide.

McDonald Upton agent Milo Rasinac said the vendors were realistic about how much the market had changed from the start of their campaign – the property was listed on May 8, four days before the federal budget.

“It is a big correction to the heady heights of a few years ago,” he said. “Within the last month it has really just plummeted.”

Records show the property was previously advertised with another agent from September last year for $6.5 million to $7.15 million. The eventual $5.3 million price tag is an 18 per cent discount on the low end of that guide.

Rasinac urged buyers not to assume the market would keep falling.

“While rates are higher than a few years ago, you’re probably also getting a discount of $50,000, $100,000, depending where you are in the market,” he said.

Buyer’s agent Emily Wallace, of Wallace Advocates, said the biggest risk for buyers was overpaying because they were making assumptions based on Melbourne’s traditionally more competitive house market.

She said strategies such as offering 5 per cent over the top of the guide could be a trap in the current moment. “That price is just not happening at the moment. So just be careful,” she said.

Both Rasinac and Wallace said buyers should be aware they were buying into a volatile market that could still go further down.

“There’s a lot of talk around negative equity at the moment, but I think most people don’t realise that only comes into play if you’re refinancing or if you’re selling,” Wallace said.

She thought the “doom and gloom” tone didn’t reflect the fact most house purchases were long-term and would probably bounce back over time.

Rasinac agreed. “Homes aren’t designed to buy and sell within a year or two,” he said.

“But buying now, at a good time? Twenty years down the track, that’s your super … it will take care of you.”