This Elwood unit failed to attract any bids at auction earlier this month. (Supplied: Hocking Stuart)
A spacious, well-maintained apartment in Melbourne’s leafy bayside suburb of Elwood would have been quickly snapped up by buyers just a few months ago.
But when a three-bedroom property, opposite the local botanical gardens, went to auction earlier this month, only a handful of potential buyers attended, and none was prepared to meet the agent’s opening bid.
Originally expected to bring in around $860,000, it was this week re-advertised with a $790,000 price tag — its second downgrade in a fortnight.
“Buyers have adjusted and are being cautious,” said Beckett Property’s Thomas Georgiou, a buyer’s advocate operating in the area.
“It takes vendors a while to realise the premiums are no longer there.”
In the nation’s cooling housing market, Melbourne’s unit prices have generally held up well so far.
But different parts of the city tell different stories, and apartments like this one in the inner south are struggling to sell.
The median price for a unit in Elwood dropped by 16.9 per cent in the March quarter, according to the Real Estate Institute of Victoria (REIV).
In nearby Prahran and Port Melbourne, falls of more than 18 per cent were recorded, and unit prices also dropped in St Kilda East (-15.5 per cent), Carnegie (-12.3 per cent), Southbank (-9.3 per cent) and South Yarra (-7.9 per cent).
Apartment prices have also fallen sharply in South Melbourne, though with less than 25 sales in that period, that figure comes with an asterisk.
“In terms of the weakness in the housing market at the moment, it is much more pronounced across the higher valued areas of Melbourne,” CoreLogic’s Cameron Kusher said.
CoreLogic’s latest Home Value Index, released at the start of the month, shows that unit prices across inner Melbourne have slipped in every second suburb for the year to date.
And the tumbles are more pronounced south of the Yarra.
Meanwhile, in the outer suburbs, unit prices have continued to rise in four out of five suburbs.
The apartment price falls have been more pronounced in some of Melbourne’s southern suburbs. (ABC Radio Melbourne: Simon Leo Brown, file photo)
‘The first ones to take a haircut’
Mr Georgiou puts the fall in the inner south’s unit prices down to its “saturation” of new and existing developments.
“If a market is transitioning, they will generally be the areas that take a hit first,” he said.
“They will be the first ones to take a haircut, because there’s so many options to choose from.”
But despite the consistency of falls, the REIV’s CEO, Gil King, has warned it’s too soon to jump to conclusions.
“To interpret market trends from short time frames, very low sales volumes and small geographical areas is unwise,” he said.
“Lower median prices are based on those particular properties sold, not on their postcode.
“Median days on market is also an indicator of demand and in most of these suburbs, the number of days is under the metro Melbourne average.”
The REIV also notes that median unit prices have generally increased in the past year, and often by some margin, even in suburbs that experienced significant falls in the March quarter.
Indeed, while unit prices across the city have stagnated this year on the CoreLogic index, they have increased by 4.4 per cent in the past 12 months, making Melbourne the only mainland capital to experience growth in this area.
“We’re coming off the hottest market I have ever seen,” said Mr Georgiou.
“So everything is going to look like it’s not performing compared to that.”