Suburbs where the price growth of the real estate boom has been wiped out

“It was the top quartile of the market that accounted for the larger declines,” he said.

The drop in prices is making it easier for some buyers, like Murrumbeena homeowner Simon Barber, to get into desirable suburbs.

Barber recently bought a bigger home in his dream suburb, despite having previously written off his chances.

“At its peak, it felt a little bit out of reach. We’re both pros with pretty good wickets so we thought there would be an opportunity [once prices started falling].

“It was more achievable than at its absolute peak.”

The median home price in Murrumbeena was $1,474,000, 4.9 percent below March 2020 prices and 15.8 percent below the September 2021 peak.

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Finding a home in the suburb Barber’s family knows and loves has been a huge relief – it meant his two sons could have their own space and stay in their schools.

“[The kids] can walk to shops, parks and schools once their little legs are a bit bigger,” he said. “We really wanted to create a little more space because both my wife and I work from home. The boys shared a room in our townhouse.”

Real estate services company Entourage Finance helped the barbers sell their old townhouse and buy their new home. Director Antoinette Sagaria said low listing volumes and lending capacity still made the purchase a challenge.

“They’ve become very difficult to buy in certain parts of the market because they’re usually held tight,” she said. “And when you add vendor hesitancy, you have very low inventory levels to work with.

“There are still potential vendors looking to sell, but this hesitation is real.”

In fewer suburbs, unit prices returned to pre-pandemic levels at just 98. The largest drop was in Kew East at 20.9 per cent, followed by Ascot Vale at 20.3 per cent and Balwyn North at 19.8 per cent.

Gareth Spence, senior economist at NAB, was unsurprised that COVID-era gains were completely wiped out in much of Melbourne.

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“We have [a] national prognosis [for an] 18 percent peak-to-trough drop, and we’ve already seen about 9 percent of that in the CoreLogic numbers,” he said.

“What’s driving the forecast … is the reduction in borrowing power.”

Spence said the downward pressure on prices from rate hikes — the steepest since 1994 — has outpaced any boost from other market forces.

However, he noted that the strong job market, rental market and population growth could help bring prices down.

Spence said while prices returned affordability did not improve because rising interest rates had reduced borrowing power more than house prices.

He expects affordability to continue to deteriorate as interest rates continue to rise and forecasts rates to hit 4.1 percent by at least May.

“This isn’t groundbreaking in terms of the broader macroeconomics, but it has implications.”