Melbourne’s Downturn Isn’t Just Bad News. For Some Buyers, It’s an Opening.
New data from Cotality shows Melbourne dwelling prices fell 3.4% in the three months to August, the second-worst result in the country behind Sydney’s 4% quarterly drop. Experts say a genuine turnaround may not arrive until the end of 2027 or sometime in 2028. But this downturn isn’t only about falling prices. For buyers willing to do the work, it’s creating a real opening to buy below potential value and build equity themselves.
The falls trace back to a broader national property downturn, recent changes to negative gearing and capital gains tax, and a wave of investor uncertainty.
Investor Sentiment Has Weakened
Robert Di Vita, Senior Property Consultant with National Property Buyers, says he currently has almost no residential investors on his books, a sharp shift from his usual client mix. The exodus has flooded parts of the apartment market, particularly Southbank and Docklands, areas he avoids due to long-running oversupply. He sees better opportunities in older-style, low-rise apartments in South Yarra and Richmond, especially where body corporate fees and building numbers stay low.
Where the Real Opportunity Is
Aife Raveche, Director and Buyer Advocate at Raveche Property, says two tradies recently came to her wanting a residential investment they could improve themselves, comfortable with losing the negative gearing benefit because they weren’t chasing a tax break. They were chasing the equity they could create.
“They’re willing to buy something that’s a little shoddier and do the work themselves,” Raveche said. “For those who do see opportunity in these types of things, it’s phenomenal buying at the moment.”
That’s the shape of this opportunity: buy selectively while sentiment and competition are softer, then create additional value through improvements, then hold or sell once the work is done. It depends on being realistic about costs, timelines, and your own capacity to do the work, but it doesn’t need the market to turn first.
A New Rule Is Pushing Money Into Commercial Property
The Federal Government’s ban on SMSFs borrowing to buy residential property has pushed demand toward commercial instead. Commercial yields sit around 5.5% to 6.5%, versus 3.5% to 4% for residential, but a vacant commercial property with the wrong tenant can sit empty for years with no income, so buyers need to do their homework first.
The Takeaway
Markets like this reward people who plan ahead, and for some buyers, that means creating value rather than waiting for it. Getting your loan structure right, whether for a straightforward purchase or a renovation, makes a real difference to how you come out the other side.
At WiseConsult, we help you explore your loan options from deposit and LVR strategies through to long-term structuring. Book your free consultation now, or call us on 0425 004 088.