Melbourne suburbs where house prices have fallen the most

October 30, 2026 — 5:00am

House prices dropped by over a quarter in one of Melbourne’s most prestigious suburbs in a year, while the cost to buy a typical house rose in more affordable parts of the market.

The median house price in well-heeled Toorak, sitting at $4,190,000, has fallen by 25.2 per cent in the 12 months to September.

This was followed by Hawthorn (down 16.4 per cent to $2.3 million), Mont Albert (down 14.1 per cent to $1,925,000) and South Yarra, which was down 13.7 per cent to $1.86 million, the latest Domain House Price Report shows.

Inner-north suburb Fitzroy, with a median house price of $1,424,000, and nearby Carlton North ($1,492,750) also made up the 10 suburbs with the deepest falls, down 13.2 per cent and 12.8 per cent, respectively.

Domain’s chief residential economist, Dr Nicola Powell, said the higher end of the market tended to show weakness first during housing downturns.

“Premium buyers can afford to wait [to sell] so at the top end, buyers are often purchasing by choice rather than necessity. So they’re more willing to sit on the sidelines when market conditions are uncertain,” she said.

“It also might mean that we’re seeing fewer prestige homes sell … with ultimately fewer trophy transactions occurring. We may be seeing smaller homes transact as well, and that can … distort what that median is.”

The lower end of the market, however, has had some growth.

The median house prices in Riddells Creek in the Macedon Ranges rose by 16.3 per cent (to $1,116,000), followed by the inner north-west suburb of Maribyrnong at 15.4 per cent ($1,050,500), and Monbulk in the Yarra Ranges, where the median house price sits at $907,500, with annual growth of 14.2 per cent.

Powell said that while buyers had pulled back, first home buyers in particular had been growing.

“Those more affordable areas are seeing demand because they are at the lower end, [and] they’re where first-time buyers remain active,” she said.

“But also I think reduced borrowing capacity as well helps to funnel demand towards the lower end.”

Powell added there was a strong possibility Melbourne’s median house price could dip below $1 million by the end of the year due to the “collision” of policy changes, housing taxes, an upcoming state election and predictions of another cash rate rise.

Rohan McLeay, 56, recently purchased a three-bedroom house in outer north-east suburb of South Morang – where the median house price is up 6.1 per cent over the year to $786,000 – after looking for a few months.

“I’d been putting the feelers out for a while, probably a good three months, looking at different houses around the area at the top of my price range – you never know what they [the homes] will go for until you go to the auction,” he said.

The electrician wanted to downsize from a larger house and was looking at properties ranging from about $710,000 to $810,000. He paid $796,000 for his new property.

“You hear on the news the market is dropping by x per cent, and at the same time when you go to an auction, you’re fighting with other people who have the same idea as you, which drives up the price … to the top of the range, or even $100,000 plus above the top,” McLeay said.

PRD chief economist Dr Diaswati Mardiasmo said it made sense that blue-chip suburbs were falling in value and suburbs with a median house price “around $700,000 to $900,000” were rising.

“It’s always the higher-end blue chip suburbs that get hit the most, or that will see the highest decline in prices, simply because they are the more expensive stock,” she said.

“And so people think twice before they actually commit that high of an amount in their purchase price, but also in their debt level.”

Mardiasmo added that a loan for a house in the more “affordable band of … around the $900,000 mark … is about $600,000, whereas if you’re looking at Toorak or anything that is over $2 million, then you’re looking at a loan that is over $1.5 million, depending on how much you’re putting up.”

In light of this year’s interest rate rises, Mardiasmo said it was “going to really impact your monthly budget ... if you borrow more”.

Ray White South Morang real estate agent Nick Petrovski said houses “sub a million are selling and are well inspected”, provided they were well-presented and priced accurately.

“Things are still moving along quite consistently irrespective of a lot of the noise for different parts of Melbourne,” he said.

The agent, who sold McLeay his home, also looks after suburbs such as Epping, Mernda, Doreen, Mill Park, Lalor, Thomastown, Reservoir and Bundoora, which have all recorded price rises over the past year.

“We’re seeing a lot of first-home buyers between that $500,000 to $800,000 mark. And good, well-presented family homes are also bringing consistent inspection numbers, and the results are very strong, irrespective of outside noise,” Petrovski said.

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More:

• Melbourne house prices
• Property investment
• Property market
• Property prices
• Toorak
• Housing slump
• Luxury property
• Housing affordability

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