"Melbourne's inner east hit hardest by house price plunge"

BOOM-time home buyers have seen thousands of dollars wiped off the value of their homes.

Home owners in the inner-eastern suburbs have been the hardest hit, especially those forced to sell after buying at the peak.

Suburbs such as Kew and Toorak rose 40 per cent in 2007, but were now suffering the steepest falls.

Anyone who bought a home in these suburbs during the boom is now facing a substantial loss if forced to sell.

In some cases, the big-borrowing top-end buyers may now owe more than their homes are worth.

Plunging prices have wiped tens of thousands of dollars off the value of Melbourne's more expensive suburbs.

Kew, Hawthorn, Toorak, Mentone, Hampton, Albert Park, Canterbury, Camberwell and Port Melbourne are among the hardest hit, along with Sorrento. Owners who have sold recently have realised massive losses.

Developers suffered a $700,000 loss on the sale of a double-storey Victorian home at 49 Mathoura Rd, Toorak, last weekend.

The house was bought for $3.8 million in November 2007 but the developers rejected an offer of $3.7 million when the property was put back on the market a short time later. It sold last weekend for $3.1 million.

Former footballer Corey McKernan lost $310,000 buying and selling his Middle Park home in less than a year.

He bought the three-bedroom brick Page St home for $2.165 million early last year and sold it for $1.855 million last Sunday.

In Armadale, the owners of 14 Myamyn St took a gamble by turning down a pre-auction offer of $4.1 million last year. The house passed in at auction for $4.12 million.

Six months later it sold for around $3.6 million, according to buyer's advocate David Morrell, of Morrell and Koren.

Prices of more affordable homes have been supported by first-home buyers scrambling to buy before the Government scraps its handouts next month.

Prices in many of these suburbs have fallen only slightly or in some cases risen.

REIV chief executive Enzo Raimondo said he expected more first-home buyers to enter the market before the grants end on June 30.

Economists expect prices will fall once the grants stop and first-home buyers no longer have an incentive to purchase quickly.

Prices have also been supported by a lack of homes being offered for sale.

Units and apartment prices fell only $3000 in the March quarter, down 0.8 per cent to $360,000.

Home repossession claims dropped last month after climbing sharply in the first three months of the year.

Supreme Court documents show 260 applications to repossess properties were lodged in April, down from 358 in January.

The numbers are still well below the levels many economists predicted.

Fears of mass evictions and home repossessions brought about by large job losses have not been borne out.

Banks have offered year-long interest rate holidays for home owners who lose their jobs.

"This will hopefully provide some relief to customers so they are not forced into repossession, and so they have one less thing to worry about," Commonwealth Bank spokesman Steve Batten said.

The number of April evictions this year was the same as last year.

Hang on whats this??? The exact areas my mega dollar property advisor was begging me to buy into have been hit the hardest??? bwhahahaahaha jokers, all of them!!!!

Hang on whats this???? Property prices are coming down, where are all the jokers who have been arguing last year that 'there is never a better time to buy' and property double every 7 years????

Gee this impact on prices already and we arent even fully in recession, record low interest rates AND low unemployment. But property prices are going to still go up? ahhhh dont think so, sorry…tip of the ice berg stuff. Bubble is popping….