Why Are 90 of the 100 largest metropolitan house price falls in Victoria?
A Market in Decline (scroll to see the list)
Victoria, and particularly Melbourne, has long been known for its thriving real estate market. For decades, property prices steadily climbed, attracting investors and homebuyers alike. However, in recent months, house prices in Victoria have been falling at a much faster rate than in other states. What’s driving this sharp decline, and why is it more pronounced in Victoria compared to other parts of Australia?
The Perfect Storm: What’s Causing the Decline?
Several key factors have converged to create the perfect storm for the Victorian property market. From increased property taxes and oversupply to economic challenges and population shifts, here’s a detailed breakdown of why Victoria is leading the nation in declining house prices.
- The Tax Burden Driving Investors Away
One of the biggest factors pushing Victoria’s property market downward is the significant increase in property-related taxes. The Victorian government has introduced a range of new property taxes that have directly impacted homeowners and investors.
- Higher Land Taxes – The state government’s decision to increase land taxes has made property ownership more expensive, particularly for investors who own multiple properties.
- Vacant Residential Land Tax Expansion – This tax has been expanded to cover more areas, making it less appealing for investors to hold onto properties.
- Windfall Gains Tax – A tax introduced on rezoned land has also discouraged new developments, further affecting property values.
With higher costs associated with holding property, many investors are now choosing to sell, flooding the market with more properties than there are buyers.
- An Oversupply of Homes
Victoria has experienced one of the largest housing booms in Australia over the past decade. Major developments, particularly in Melbourne’s outer suburbs and regional centers, have created an abundance of new homes. While this initially helped meet growing demand, the balance has now shifted.
- Melbourne has seen a massive increase in apartment developments, leading to an oversupply in the market.
- In some areas, rental vacancy rates have risen, further lowering demand for new property purchases.
- More properties available means buyers have more options, reducing competition and causing prices to fall.
When supply outstrips demand, prices naturally decline. Unlike Sydney, which still faces significant housing shortages, Melbourne’s excess supply is putting downward pressure on property values.
- Economic Challenges Hitting Victoria Hard
Victoria’s economy has been under strain for several years, and this is playing a significant role in the declining housing market.
- Business Closures – The state recorded a net reduction of over 7,600 businesses in the 2022-23 financial year. This loss of businesses has resulted in fewer jobs and less economic activity.
- Post-Pandemic Recovery – Victoria was one of the hardest-hit states during the COVID-19 pandemic due to prolonged lockdowns. The economic recovery has been slower than expected, leading to reduced buyer confidence.
- Higher Interest Rates – Rising interest rates across Australia have made mortgage repayments more expensive, reducing the number of people willing or able to buy homes.
The combination of these economic challenges has led to a decrease in demand for property, further exacerbating price declines.
- Population Shifts: The Exodus from Victoria
Population movement plays a crucial role in real estate trends. During the COVID-19 pandemic, Victoria endured some of the strictest lockdowns in the world, prompting many residents to relocate to other states.
- Queensland, in particular, saw a surge in new residents leaving Victoria for its warmer climate and more relaxed restrictions.
- Many professionals and young families have chosen to move to Sydney or Brisbane in search of better job opportunities and lifestyle benefits.
- A slowing migration rate means fewer new residents moving to Victoria, reducing demand for housing.
As a result, areas that previously experienced high demand are now seeing prices fall as demand weakens.
- Declining Buyer Confidence
The psychology of the market is another critical factor influencing the rapid drop in house prices. When buyers believe prices will continue falling, they delay purchasing decisions, further reducing demand.
- Many potential buyers are waiting for the market to hit rock bottom before committing to a purchase.
- First-home buyers are increasingly cautious, fearing they could end up in negative equity if they buy now.
- Investors, once a dominant force in the market, are pulling back due to uncertain returns and increasing costs.
This wait-and-see approach is exacerbating the downward trend in house prices, creating a self-reinforcing cycle.
How Does Victoria Compare to Other States?
While house prices are softening across the country, Victoria is experiencing the most pronounced decline. Here’s how it compares to other major states:
- New South Wales – Sydney’s market has been more resilient due to ongoing housing shortages and high demand.
- Queensland – Brisbane’s market remains strong, driven by population growth and a more favourable economic outlook.
- Western Australia – Perth continues to see steady growth due to mining-driven economic stability.
Victoria’s unique combination of high taxes, oversupply, economic uncertainty, and population loss makes it the worst-performing housing market in the country.
The Future of Victoria’s Property Market
While the market is currently in decline. Several factors could help stabilize and eventually reverse the trend:
- If the government revises its tax policies to encourage investment, demand could rebound.
- As interest rates stabilize, buyer confidence may return.
- Population growth, driven by immigration, could increase demand for housing.
For now, however, Victoria remains the most challenging market for property owners in Australia with no short to medium term fix obvious.
The top 100 worst performing suburbs in Australia
| Area | Price | 6 Month Change in price |
| Fairfield, VIC 3078 | $1,569,983.00 | -3.80% |
| Northcote, VIC 3070 | $1,625,457.00 | -3.70% |
| Carlton North, VIC 3054 | $1,394,697.00 | -3.63% |
| Donvale, VIC 3111 | $1,561,598.00 | -3.51% |
| Kambah, ACT 2902 | $844,716.00 | -3.31% |
| Templestowe Lower, VIC 3107 | $1,317,534.00 | -3.27% |
| Port Melbourne, VIC 3207 | $1,638,376.00 | -3.25% |
| Kew, VIC 3101 | $2,583,147.00 | -3.23% |
| Doncaster, VIC 3108 | $1,569,378.00 | -2.97% |
| Kensington, VIC 3031 | $1,089,969.00 | -2.87% |
| Hawthorn East, VIC 3123 | $2,356,833.00 | -2.76% |
| New Norfolk, TAS 7140 | $469,718.00 | -2.73% |
| Glen Iris, VIC 3146 | $2,521,712.00 | -2.68% |
| Bulleen, VIC 3105 | $1,345,536.00 | -2.68% |
| Hawthorn, VIC 3122 | $2,428,280.00 | -2.36% |
| Highett, VIC 3190 | $1,422,183.00 | -2.29% |
| Balwyn North, VIC 3104 | $2,387,549.00 | -2.16% |
| Camberwell, VIC 3124 | $2,538,594.00 | -2.12% |
| Cronulla, NSW 2230 | $2,947,700.00 | -2.06% |
| Templestowe, VIC 3106 | $1,782,730.00 | -2.02% |
| Burwood East, VIC 3151 | $1,253,476.00 | -1.90% |
| Nunawading, VIC 3131 | $1,225,213.00 | -1.79% |
| Parkdale, VIC 3195 | $1,460,748.00 | -1.79% |
| Box Hill South, VIC 3128 | $1,495,366.00 | -1.65% |
| Fawkner, VIC 3060 | $757,967.00 | -1.58% |
| Elwood, VIC 3184 | $2,326,612.00 | -1.57% |
| Sunshine, VIC 3020 | $841,080.00 | -1.52% |
| Fitzroy North, VIC 3068 | $1,468,573.00 | -1.51% |
| Ringwood, VIC 3134 | $964,148.00 | -1.45% |
| Sunshine West, VIC 3020 | $720,253.00 | -1.40% |
| Dallas, VIC 3047 | $525,320.00 | -1.39% |
| Laverton, VIC 3028 | $592,289.00 | -1.38% |
| Strathfield, NSW 2135 | $3,650,076.00 | -1.37% |
| Richmond, VIC 3121 | $1,619,755.00 | -1.34% |
| Westmeadows, VIC 3049 | $694,868.00 | -1.34% |
| Doncaster East, VIC 3109 | $1,692,858.00 | -1.32% |
| Blackburn North, VIC 3130 | $1,323,325.00 | -1.31% |
| Tullamarine, VIC 3043 | $717,014.00 | -1.24% |
| Cherrybrook, NSW 2126 | $2,221,935.00 | -1.20% |
| Wheelers Hill, VIC 3150 | $1,543,797.00 | -1.20% |
| Brunswick, VIC 3056 | $1,337,273.00 | -1.19% |
| Pascoe Vale South, VIC 3044 | $1,193,949.00 | -1.17% |
| Clayton South, VIC 3169 | $961,836.00 | -1.17% |
| Glenroy, VIC 3046 | $820,424.00 | -1.14% |
| Hoppers Crossing, VIC 3029 | $729,218.00 | -1.14% |
| Sandy Bay, TAS 7005 | $1,522,021.00 | -1.09% |
| Albert Park, VIC 3206 | $2,410,170.00 | -1.09% |
| Preston, VIC 3072 | $1,187,759.00 | -1.08% |
| Baulkham Hills, NSW 2153 | $1,974,554.00 | -1.01% |
| South Yarra, VIC 3141 | $1,779,065.00 | -1.01% |
| Vaucluse, NSW 2030 | $4,752,818.00 | -0.99% |
| Thornbury, VIC 3071 | $1,524,642.00 | -0.98% |
| Caulfield North, VIC 3161 | $2,223,570.00 | -0.96% |
| Coburg, VIC 3058 | $1,188,894.00 | -0.93% |
| Gladstone Park, VIC 3043 | $725,719.00 | -0.93% |
| Peakhurst, NSW 2210 | $1,533,270.00 | -0.92% |
| Reservoir, VIC 3073 | $957,491.00 | -0.92% |
| Oakleigh South, VIC 3167 | $1,153,928.00 | -0.86% |
| Balmain, NSW 2041 | $2,647,740.00 | -0.85% |
| Brunswick East, VIC 3057 | $1,396,673.00 | -0.85% |
| Eastwood, NSW 2122 | $2,755,141.00 | -0.84% |
| Forest Hill, VIC 3131 | $1,243,599.00 | -0.84% |
| Dingley Village, VIC 3172 | $1,086,788.00 | -0.83% |
| Wahroonga, NSW 2076 | $2,794,280.00 | -0.81% |
| Mosman, NSW 2088 | $4,218,423.00 | -0.80% |
| Oak Park, VIC 3046 | $1,131,690.00 | -0.78% |
| Brunswick West, VIC 3055 | $1,324,284.00 | -0.77% |
| Sunshine North, VIC 3020 | $780,758.00 | -0.68% |
| Burnside, VIC 3023 | $790,869.00 | -0.67% |
| Altona, VIC 3018 | $1,228,621.00 | -0.64% |
| Truganina, VIC 3029 | $644,583.00 | -0.63% |
| Balwyn, VIC 3103 | $2,953,710.00 | -0.56% |
| Spotswood, VIC 3015 | $1,191,573.00 | -0.53% |
| Altona Meadows, VIC 3028 | $767,830.00 | -0.52% |
| Cheltenham, VIC 3192 | $1,306,416.00 | -0.52% |
| Malvern East, VIC 3145 | $2,184,701.00 | -0.51% |
| Glen Waverley, VIC 3150 | $1,999,501.00 | -0.49% |
| Pascoe Vale, VIC 3044 | $1,079,269.00 | -0.48% |
| Newport, VIC 3015 | $1,208,483.00 | -0.46% |
| Winston Hills, NSW 2153 | $1,591,972.00 | -0.42% |
| West Footscray, VIC 3012 | $856,860.00 | -0.42% |
| Blackburn South, VIC 3130 | $1,396,245.00 | -0.39% |
| Fraser Rise, VIC 3336 | $688,002.00 | -0.36% |
| Ivanhoe, VIC 3079 | $1,815,295.00 | -0.33% |
| St Albans, VIC 3021 | $700,095.00 | -0.33% |
| Carlingford, NSW 2118 | $2,164,716.00 | -0.31% |
| Williams Landing, VIC 3027 | $863,871.00 | -0.18% |
| Deer Park, VIC 3023 | $671,873.00 | -0.17% |
| Gymea Bay, NSW 2227 | $2,018,068.00 | -0.15% |
| Malvern, VIC 3144 | $2,873,979.00 | -0.13% |
| Hurstville, NSW 2220 | $2,107,398.00 | -0.12% |
| Toorak, VIC 3142 | $3,923,374.00 | -0.10% |
| Noble Park North, VIC 3174 | $793,567.00 | -0.09% |
| Roxburgh Park, VIC 3064 | $713,835.00 | -0.09% |
| Springvale, VIC 3171 | $945,741.00 | -0.09% |
| Northmead, NSW 2152 | $1,622,741.00 | -0.07% |
| Viewbank, VIC 3084 | $1,195,060.00 | -0.06% |
| Delahey, VIC 3037 | $660,252.00 | -0.04% |
| Beaumaris, VIC 3193 | $2,168,986.00 | -0.03% |
| Dundas Valley, NSW 2117 | $1,801,774.00 | 0.00% |
Final Thoughts
Victoria’s housing market is undergoing a significant correction, and house prices are falling faster than anywhere else in the country. High property taxes, an oversupply of homes, economic struggles, population shifts, and declining buyer confidence have all played a role in this downturn.
For potential buyers, this presents an opportunity to enter the market at lower prices. For current homeowners, it’s a challenging time that may require a long-term perspective. As always, staying informed and understanding the market dynamics is key to making the right property decisions.
The big question remains: is Victoria a Canary for the entire Market? Or a market driven recalibration away from onerous regulation and taxation?
