The Melbourne neighbourhoods where home buyers can find the biggest discounts

Some of Melbourne’s most expensive suburbs are offering the largest discounts on houses for sale, new data reveals, as buyers get more negotiating power and choice.

Domain’s latest Market Insights Report examined houses that sold via private treaty in the six months to May and compared the listing price with the ultimate sale price. The Manningham East area, which includes the suburbs of Doncaster East and Warrandyte, recorded the highest rate of discounting, with houses 10.5 per cent of transacting below the listing price.

The median house price in the Manningham East region was $1.65 million, according to the latest Domain house price report.

Houses sold in other pricey areas were also seeing bigger discounts with those in Stonnington West (Toorak, Prahran), selling 8.6 per cent below their asking price, and 8.3 per cent below in the Macedon Ranges.

The Mornington Peninsula and Stonnington East (Malvern, Malvern East), both saw 8.2 per cent of houses transacting at a discount, while houses in Port Phillip (Albert Park, Balaclava) sold 7.9 per cent lower than the asking price.

Across Melbourne, the three months to May, 6.3 per cent of all houses were sold for less than their listing price, and discounting was at a nine-month high, according to Domain.

While some buyers were looking to grab a bargain with vendors now more willing to do a deal, others are waiting to see whether prices will drop further, experts say.

The potential for more rate rises this year and the federal government’s proposed changes to negative gearing and capital gains tax was also prompting some buyers to pause.

Domain’s chief residential economist Dr Nicola Powell said Melbourne’s property market had seen discounting rise slowly.

“In the more premium locations, it seems sellers just haven’t met where the buyers are at now,” Powell said.

“We [also] know the buyer pool is thinning, and they are becoming more choosy particularly in the higher end of the market. They’re not willing to compromise any more.”

Powell said listing numbers had risen recently, giving buyers more choice, and more power to negotiate a better deal.

Much like Melbourne’s auction results, discounting data showed the city’s property prices were continuing to soften, Powell said, with the vast majority of overall property sales via private treaty.

Woodards Manningham’s Stasi Adgemis said vendors were much more willing to negotiate a sale, with the local market readjusting over the past few months.

Some sellers had been looking for new agents, rather than lowering their asking price; however, this trend had changed in recent weeks.

“We’ve had more than enough sales over the past 30 days, so people are now seeing where prices are at – no-one is going to go to the market with an over-inflated price,” Adgemis said.

Buyers were talking about further interest rate rises, and not wanting to overpay for a property, he said.

“That’s their biggest fear at the moment,” Adgemis said.

Buyers were also waiting for clarity on tax changes and auction reforms, in hopes that it would lower house prices further.

”There’s just so much uncertainty,” said buyers’ agent Cate Bakos.

“Some are saying let’s just buy a bargain, others are saying let’s wait and see if the market falls any further.

“They’ve been sitting on their hands,” Bakos said.

Those that were entering the market were finding some good deals with discounts of around 5 per cent across the board, she said.

“There’s definitely some bargains now, just across the board from the middle ring to the outer suburbs,” Bakos said.

“The only type of property where there are no super bargains are family homes – they’ve held their own.”

Westpac senior economist Matthew Hassan said Melbourne’s market had softened and expected it to remain flat for the rest of the year, with no huge price rises or falls.

He said it remained to be seen what impact changes to reforms to negative gearing and capital gains taxes would have on the market, though he didn’t expect to see a huge sell-off of investment properties.

“It’s going to encourage investors to hang on to properties, only those struggling with higher interest rates would go to the market,” Hassan said.