But it\u2019s not all doom and gloom: the same analysis reveals there are still pockets where homes are \u201cundervalued\u201d.<\/p>\n
These undervalued markets are where prices are likely sitting below where they should be, offering buyers and investors a rare chance to get in before values lift.<\/p>\n
The findings from analytics group SuburbData draw a sharp line between suburbs where prices have run too hard, too fast \u2014 and those where value still remains.<\/p>\n
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Auction clearance rates have hit dramatic lows across Sydney and Melbourne in recent weeks. Picture: Lyndon Mechielsen<\/p>\n
An overvalued suburb, the research explained, isn\u2019t simply one with an eye-watering median price. <\/p>\n
Instead, a suburb tips into overvalued territory when years of aggressive capital growth push prices beyond what local supply and demand can support.<\/p>\n
SuburbData analyst Jeremy Sheppard said the danger for recent buyers was that the value of anything they buy could soon drop, raising the risk of negative equity, especially for those with small deposits.<\/p>\n
\u201cThe risk is that if you buy in a market like this your home may sit there for a while without getting any return on your investment, or values may fall and you go into negative equity,\u201d he said.<\/p>\n
\u201cThat may not be a problem if you plan to stay there 10 years, as eventually prices in these areas will go up again, but you also never know when your circumstances change, when you may have to sell because of a change in work or a relocation.\u201d<\/p>\n
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Announcements by Treasurer Jim Chalmers and RBA governor Michele Bullock have had a hand in the current downturn.<\/p>\n
Telltale signs of \u201covervalued\u201d prices were runaway price spikes that have outpaced surrounding areas and huge price gaps compared with nearby, similar suburbs.<\/p>\n
They also had fading buyer demand coupled with a rise in listings and house prices stretching far beyond comparable units.<\/p>\n
\u201cIf you are ever forced to sell and there hasn\u2019t been enough capital growth, or even negative equity, you may be in the position where you will still owe (lenders) money after sale and have to tip in extra,\u201d Mr Sheppard said.<\/p>\n
\u201cI\u2019d also be cautious as an investor in these areas. And I would even exercise caution as a first-home buyer, unless you have a very large deposit, which not many do.\u201d<\/p>\n
Undervalued suburbs showed the opposite conditions and buyers in these markets could benefit from catch-up growth in values.<\/p>\n
MELBOURNE<\/p>\n
Melbourne\u2019s most undervalued and overvalued suburbs revealed<\/a><\/p>\n SuburbData analyst Jeremy Sheppard said Melbourne arguably had more undervalued markets than Australia\u2019s other major capitals after years of weaker growth than Brisbane, Perth and Sydney.<\/p>\n SuburbData analyst Jeremy Sheppard.<\/p>\n Among undervalued areas, SuburbData rated St Kilda East $253,000 below comparable surrounding markets, the largest estimated gap in Melbourne, while nearby Caulfield was rated $222,000 above them.<\/p>\n At the other end of the scale, Parkville and Deepdene were each rated $250,000 above comparable nearby markets, suggesting current prices may be overvalued.<\/p>\n BRISBANE<\/p>\n<\/p>\n