WEALTHY home owners have been hit by a 15 per cent drop in the value of their homes.

A bidding slump has seen more than $200,000 wiped off the average price paid for homes worth more than $1 million.

Property valuation company Herron Todd White said that after rising almost 70 per cent in the past six years, the prestige housing sector median has fallen from $1,593,500 in the March quarter to a current median of $1,363,500.

The worst hit suburbs include Toorak, South Yarra, Middle Park, Malvern, Brighton, Canterbury, Armadale, Kew and Albert Park.

Herron Todd's national research director, Richard Jenkins, said the price of more affordable homes had remained steady or risen.

"Melbourne's housing and unit markets have continued to record solid increases with the housing median rising from $524,500 to $559,000, while the median price for a unit grew from $450,000 to $463,000," he said.

"Over the past six years, Melbourne's prestige residential market outperformed both apartment and housing, growing by 68 per cent compared to apartments, which enjoyed growth of 54 per cent and housing, which grew by 53 per cent."

Buyers advocate David Morrell, of Morrell and Koren, said the tide had moved in favour of buyers and vendors were being forced to lower their expectations.

"Agents are now spruiking a flood of properties about to come on to the market; but even if that's true, there are too few buyers around to soak up any tsunami," he said.

He said expectations that a house in Moorakyne Ave, Malvern, would sell for more than $4.5 million were dashed when three bidders stopped at $4 million - $5000 less than the home brought in 2007.

He said another home in St Georges Rd, Toorak, passed in on a vendor bid of $2.5 million against a reserve of $2.9 million on Saturday.

A Hawthorn home for sale for more than $4.5 million last year passed in on a vendor bid of $3.6 million.

"The tightening of foreign investment laws preventing buyers from buying existing residential property, unless as a main residence, has no doubt had an effect on overall prestige price rises and this is likely to continue to (affect) this sector," Mr Jenkins said.

that's right, and what with record levels of immigration and record low housing construction, that's guaranteed to keep prices rising in the lower end of the market and rents skyrocketing, and a continually rising number of homeless people.
Do politicians ever think of these knock on effects when they mouth off smart ass policies in election campaigns?
Or do they just want to sound good?