Melbourne’s suburbs with the biggest price increases and falls

Meanwhile, several suburbs with median house prices approaching $2 million experienced the biggest falls, including South Yarra (down 14.7 per cent), Armadale (down 14.6 per cent), Elwood (down 14.3 per cent), Hawthorn East (down 12.4 per cent) and Elsternwick (down 12.3 per cent).

“These high-end homes may also stop trading during a downturn, which can affect price growth,” Powell said. “They can only be sold at the right price … which can also affect the overall median price.”

Buyer’s agent Antoinette Sagaria noted that prices in middle-ring areas have risen and said family homes tend to be a recession-proof investment.

“When a family needs to move or has certain requirements, sometimes market conditions can only dictate so much,” said Entourage’s director of real estate and finance.

“In contrast, when you look at some of the more expensive areas … you have less need to move, or the motivation to move may be different,” she said.

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She said well-maintained or renovated properties performed well, particularly if they were spacious and had classic floor plans, and areas like Mont Albert North (which had the fourth-fastest growth) had a high number of such family homes.

House prices are generally rising — most suburbs are more expensive than a year ago — but that is also putting pressure on buyers.

First-home buyer Sean Singh, 32, bought a one-bedroom apartment in Kew after failing to find any suitable properties in his preferred area.

“I was looking very much at the Collingwood and Richmond areas because they were more central to where I was living at the time … but there were cladding issues, body corporate fees were high and the apartments were much smaller, so it wasn’t really what I was looking for,” Singh said.

The technology partnership manager said he could get better value for money by looking at neighbouring suburbs a little further from the city.

“I found a house that was much larger, with a patio almost as big as the entire apartment, a full-sized kitchen and everything I really wanted.”

Singh, who has been renting in Collingwood, said he wanted to take advantage of the opportunity to enter the property market while rents were still affordable.

“For me it’s mainly driven by how can I afford to buy a home while it’s still affordable, I can afford it now but I don’t know what the future of the housing market is going to look like,” he said.

Impact Economics and Policy chief economist Dr Angela Jackson said the housing market had exceeded expectations, with prices rising despite rising interest rates.

She said widespread price increases across suburbs meant young Australians looking to buy a home would need significant help from their parents.

She attributed the rise in house prices to supply and demand, as not enough new homes were being built to meet the growing population and empty nesters tended to continue living in their existing homes rather than downsizing and reselling the housing stock. She also pointed out that there was demand for real estate as a tax-advantaged form of investment and called for reforms to stamp duty and capital gains tax.

“This problem has only gotten worse over time. So now it’s becoming increasingly out of reach for middle-income earners and even high-income earners to enter the property market without help from the bank of mum and dad,” she said.