The Melbourne neighbourhoods where property buyers can find the biggest discounts

Home sellers in Melbourne’s ritzy inner eastern suburbs are offering the biggest price discounts, new data shows, while areas considered hot property during the pandemic also have large reductions.

The size of discounts on properties that sold via private treaty is rising across many Melbourne regions, according to Domain figures that compare listing prices and sold prices. Discounts across the city edged up from an average 5 per cent in April 2021 to 5. 4 per cent in April this year.

The biggest cuts to house prices were in the Stonnington area. In the west end of Stonnington, they dropped by an average 9. 1 per cent, bigger than the average recorded in April last year.

In the eastern part of Stonnington, house prices were being cut by an average 8. 5 per cent, and units by 9. 9 per cent. The figures do not include auction sales, the method used for homes judged likely to attract the highest level of competition.

Domain chief of research and economics Dr Nicola Powell said the data showed vendors were rethinking the value of their homes as further interest rate rises loomed.

These discounts show that there is some element of vendors believing their home is worth ‘this much’ and I’m going to test the market but ultimately, they’re not meeting what the market believes it’s worth and have to discount, Powell said.

While higher-priced market segments, like those in Stonnington, usually led the house-price downturn, popular areas were now part of the first wave of price falls, she said.

A Game Property Advisory buyers’ agent Jim Malamatinas said apartments were offering the most considerable amount of discount in areas such as Stonnington, as buyers are not as desperate as they once had been to buy at any cost.

Apartments are the No. 1 thing, Malamatinas said. Buyers are just a little bit more reserved now than they were … They do their market research before and are being stand-offish now. It can take five minutes to get an auction started, and it goes really slow.

Bigger discounts are being offered on homes that sell privately, or even off-market, if the deal could be done quickly, and give vendors more peace of mind if they had already bought another property.

Jellis Craig Stonnington partner Michael Armstrong said the transition in the market, from red-hot to much cooler, forced vendors to change their pricing.

We’re obviously going through a transitional phase of the market and people are having to adapt, he said.

Armstrong said he expected a period of reduced activity across the region, as vendors and buyers adjusted to the slowing market.

The Macedon Ranges, where tree-changers fled during Melbourne’s six lockdowns, also saw a shift in discounting where the average discount jumped by 3 percentage points from 4. 6 per cent to 7. 6 per cent over the year to April.

Keatings Real Estate owner John Keating said vendors were now realising that buyers were not willing to pay as much as they had last year when the market was booming.

People get carried away expecting to get prices the same as last year, Keating said.

The changing market was not only making it hard for vendors, but for agents who were unsure what buyers would pay for particular properties. Keating, who advertises reserve prices, said it was becoming much tougher.

I have two auctions this weekend where I have said to the vendors: ‘I’m not sure what the market will value these properties at,’ Keating said. We have set reserves, at figures higher than I would have expected this time last year … but we don’t know what the market may be prepared to pay.

Though many regions of Melbourne had recorded deepening discounts, not all did.

In Maroondah, in the city’s outer east, the average amount of discount was less compared to last year.

McGrath Croydon’s Paul Fenech said while prices were holding up, the market was slowing in the region. He said agents were expecting to see a rise in discounting in the coming months, given discounting was happening closer to the city.

We get the ripple effect, so if you see discounting in the inner-city areas it usually comes out to Blackburn, Ringwood, Nunawading and to here, he said.

Buyers were becoming more hesitant at auctions, with some waiting until after properties passed in to negotiate and buy.

FOMO has gone out of the market, Fenech said. We do have to work harder to get deals together – six months ago it was a lot easier, but things were going up so much in 2021 it had to ease.

Leave a Reply

Your email address will not be published. Required fields are marked *