Suburbs where property prices fell by double digits in five years

Property prices have fallen by double digits over the past five years in a handful of neighbourhoods, bucking a broader growth trend.

The markets that have fallen most are largely unit markets and many are in Melbourne, followed by Sydney. Just one suburb from outside NSW or Victoria makes the list.

Some, although not all, are areas where a significant supply of new housing has been delivered, including some apartment developments designed for investor buyers rather than owner-occupiers. Meanwhile, rising mortgage rates from 2022 until this year discouraged some investors.

The deepest falls were in Melbourne’s Chadstone, down 25.2 per cent to a median unit price of $497,000 over the five years to June 2025, on Domain data, followed by Maidstone (down 23.1 per cent) and West Melbourne (down 21.6 per cent).

Sydney’s sharpest drop was in Ultimo’s unit market, down 17.6 per cent over the five years to June, then Eastwood, down 17.5 per cent.

Unit markets in Melbourne’s CBD also made the list (down 15.8 per cent) and Sydney’s Sydney Olympic Park (down 11.1 per cent).

The research comes as federal and state governments aim to deliver more housing, including medium density development close to public transport.

Domain chief of research and economics Dr Nicola Powell noted the prevalence of suburbs from Melbourne on the list, where there has been higher overall levels of housing supply, investors selling, an increase to state land tax and loss of population in the lockdown years.

“It’s really dominated by suburbs that do have a high level of units,” she said. “And also the type of supply you’d describe as being investor-grade, it’s not necessarily owner-occupier quality of apartments and units.

“When you do see high levels of supply in concentrated areas it can have an impact on pricing.”

She thought the figures showed the property market is multi-speed, and not rising everywhere, which may be an opportunity for first home buyers who are about to get expanded access to the federal government’s First Home Guarantee Scheme next week, which will allow purchases with a low 5 per cent deposit.

But she also thought the new plans to deliver more homes are different, focusing on medium density near transport rather than 50-storey buildings. Quality would be important in the new projects, as well as innovative methods such as modular housing that could improve affordability, she said.

Angie Zigomanis, Quantify Strategic Insights head of data and insights, agreed the investor-driven unit market had recorded some of the biggest impacts.

“We’ve seen growth in rents, but we’ve also seen big growth in mortgage interest rates,” he said. “So from an investor perspective, rising rents haven’t really improved the investor equation for them.”

He said in areas with new development, buyers had a lot of similar choice between the units in one tower and those in the tower next door. This meant sellers faced competition, which put downward pressure on prices.

“There might be circumstances where that [owner] is more desperate to sell than you, or more eager to sell than you, or more willing to be a price-taker,” he said.

He added that building defects and quality issues in recent years had also made some potential buyers wary, and it was the larger homes with more internal space and a functional layout that were likely to have the best resale performance.

But he thought weaker unit pricing was also a challenge to the feasibility of new residential developments, as buyers would be unlikely to pay perhaps $200,000 more for a new apartment than existing one that is only a few years old.

“You’re not going to see many projects get off the ground [yet],” he said. “Ultimately they will – because rents will catch up, and the equation gets to a point where it does become attractive for prices to rise and new development to take place, that eventually happens.”

William Buck chief economist Besa Deda thought the relationship between supply and demand was having an impact on pricing in some of these areas.

“If a suburb is more dense, it’s possible that there’s more supply than demand for those particular suburbs, and that might be something that has impacted the price over that five-year period,” she said, adding that Melbourne’s market generally since 2019 had risen less than other cities.

She thought that as more new homes are added in future, if demand held steady, there would be a moderation in the pace of price growth. But she doubted demand will stay the same, since the Reserve Bank is cutting interest rates, inflation-adjusted wages growth is improving and the population is growing.

“The extra supply will help address that demand, but the challenge is demand is still running much hotter than supply and we can’t add to supply quickly enough.”