Melbourne’s most overvalued postcodes revealed

1 day ago 6

SuburbData analysis warns Melbourne buyers to tread carefully in outer and prestige pockets where values could be at risk of flatlining. Picture: Jake Nowakowski

Melbourne buyers chasing outer and prestige postcodes are being warned to tread carefully, with new research flagging suburbs where prices are at risk of flatlining.

According to SuburbData’s June 2025 analysis, Beaconsfield Upper, Deepdene, Warrandyte South, Pakenham South, Silvan and Portsea were named as the city’s most overvalued.

Analysts say desirability isn’t in question for the popular areas, but the timing and price are.

SuburbData director Jeremy Sheppard said buyers needed to understand the risk of paying peak prices in overheated pockets.

“It may take a while till you get any growth on your investment in an overvalued suburb,” Mr Sheppard said.

“Usually prices will then level out over a few years but buying at the peak of a fast moving market could even mean, in extreme cases, that prices soon fall.”

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SuburbData’s Jeremy Sheppard says buyers in overvalued suburbs may face years of stagnant growth or even price falls if they buy at the peak.

Whitefox chief executive and Block judge Marty Fox said emotion often drove premiums in hot suburbs, and that could sting later.
“You’re paying for yesterday’s growth,” Mr Fox said.

“If the market stalls, you’ve got little insulation, and the holding costs don’t care about your paper losses.”

Whitefox boss Marty Fox warns emotion often drives premiums in hot suburbs, leaving buyers exposed if the market stalls.

Analysts say paying top dollar in Melbourne’s most desirable suburbs can still sting if growth stalls and holding costs climb. Picture: Andrew Henshaw

However, the head of Gary Peer Real Estate urged buyers not to miss out due to a buzz word, noting that some big price moves were justified when fundamentals change.
“I’m not sure I entirely buy into the term ‘overvalued,” Gary Peer said.

“Often, suburbs that appear overvalued have simply caught up to where they should be.”

Gary Peer argues suburbs branded ‘overvalued’ may simply be catching up, with infrastructure and amenity driving genuine price shifts.

Recent Murrumbeena sales topping $4m show how infrastructure upgrades, new cafes and schools have transformed the suburb’s property market. Picture: Level Crossing Removal Authority

Mr Peer pointed to recent sales in Murrumbeena closing on $4m, an “unheard of” sum until recently.

“Some might say that’s overvalued, but the suburb has transformed: the skyrail removed traffic bottlenecks, new developments brought cafes and restaurants, schools improved, and the overall amenity lifted dramatically,” Mr Peer said.

“In that context, the price growth makes sense.”