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Melbourne's market may be down, but opportunities exist for borrowers and brokers, some market participants say.
Property prices took a nosedive last year in Victoria's capital city thanks to higher-for-longer interest rates, rental reforms and additional taxes by the Victorian government.
But amid all the headwinds lies an entry point for new arrivals.
"There's always an opportunity. It's a good time to buy if you can make money on the deal," Andrew Rennie, a Melbourne-based mortgage broker at Helping Hand Finance, told Australian Broker. "It depends on how people structure their investments."
Randolph Clements, managing director at Raine & Horne Victoria, added that it's a good time for first-time homeowners as well. “Victoria’s affordability positions it for a robust recovery,” he said. “Now is the time to buy rather than wait."
The median home value in Melbourne declined 3% to roughly $774,000, according to CoreLogic data. A similar report by PEXA found that the median sale price of a home in the Greater Melbourne area fell to $745,000 in December 2024, down from $810,000 in March 2022.
The stats sit in stark contrast to other parts of Australia – such as Perth and Queensland, which are booming – and caused some investors to flee, while fewer existing homeowners thought about selling.
"Some investors were in a situation where they couldn't keep an extra property," Rennie said. "You've got insurance, land tax, upkeep. So there were investors leaving the market because it's not viable for them to stay."
Jake Sgarbossa, head of commercial at My Mortgage Freedom, added that at his firm Melbourne had the sharpest decrease in settlements nationally in 2024.
Meanwhile, first-time home shoppers are on the rise. PEXA data shows that there were more first-time homebuyers in Victoria in 2024's fourth quarter, in addition to fewer rental properties.
"This confirms widespread anecdotal reports of a share decline in residential rental properties in [Victoria], as investors sell off their rental properties (in response to state government tax and regulation changes) to an eager pool of first-time homebuyers," the report said.
Rennie said the biggest challenge has been finding a property.
"The prices have fallen, but there are less houses on the market," he said. "What I'm seeing is that clients are struggling to find properties. And people who want to sell are probably not putting their homes on the market because of the stagnant prices."
State and national levies, as well as interest rates, are also ongoing concerns.
"It all comes down to the taxes," Rennie said. "With rates where they're at, repayments are higher."
At present all four big banks in Australia are anticipating the Reserve Bank of Australia will cut the official cash rate at its February meeting. But until then borrowers will have to wait and see, and continue paying a premium in rates.
Chris Paterson, general manager, distribution and marketing at non-bank lender Resimac, added that potential buyers will need to ensure they have enough cash flow to support a purchase. "If they don't, then there's a risk," he said.
Regardless of the market, there's always an opportunity for brokers, Rennie said.
"Brokers help clients find the best solution for them," he said, adding that many brokers shy away from working with newbies. But working with first-timers is one way for brokers to ensure they have a client for life.
"Working with first-time homebuyers can be an avenue of success," Rennie said. "You have to be patient, as a broker. And a lot of brokers don't want to work with first-time homebuyers. But it's about being with the clients through the whole journey."
