Corelogic has identified 65 markets in Sydney and Melbourne where values are below record highs from the 2010s and vendors are even willing to sell at a loss, but buyers are still not interested. 

Housing affordability continues to deteriorate in Australia on several fronts. The rate of newly built housing supply has largely been insufficient to meet the demand of strong population growth. There are some markets identified where housing affordability is improving despite high interest rates and vendors willing to sell at a loss. Buyers are not biting.

The reason- the wrong kind of supply.

Most unit markets in the country have been able to recover from a supply glut that occurred in the 2010s, but many Sydney and Melbourne markets are still underperforming.

Melbourne is currently the weaker of the two capital city markets overall, however, Sydney accounts for most of this list with 51 unit markets sitting below a peak from 2018 or 2017.

As a whole, the Sydney unit market values have risen 8.7% since mid-2017, suburbs like Epping stand out with median prices of just under $800k- and the value of the unit market is down -18.4% from a peak in May 2017. Affordability in this area has improved with the average time taken to save a 20% deposit in this area now 7.6 years down from 9.8 years in 2017. 

In Melbourne values across greater Melbourne have increased 6.5% from mid-2017 to September this year, however the inner Melbourne region, which has 8 suburbs on the list has unit values still -8.6% below their highs of 2017. The median unit price in this market was $514k in September 2024, and in June it took 5.4 years to save a 20 % deposit. This area is one for buyers with 42.2% of unit sellers in the Melbourne City Council area incurring a loss from selling in the June quarter of this year. 

Why Have These Markets Underperformed?

• Under-performing units are generally tied to the oversupply in investment grade units built in the 2010s. As interest rates moved lower post GFC, residential property investment became particularly attractive. During this period Investor share of new housing finance hit highs of 46% in 2015.
• Today’s buyers are concerned about the high density of these builds and also the possible defects that come with them.

There has been some turnaround in capital growth of late in some areas so there may be some chance of a sway in buyers- if the price stays right for potential buyers.

For the full list of the 65 suburbs click below:

Suburb List