Thousands of Nepali families living in Melbourne may be seeing the value of their homes decline, with some suburbs recording property price drops of more than 6 per cent over the past three months.

According to new data from Cotality, Melbourne's housing market has continued to weaken during the June quarter, with house prices across the city falling by 2.6 per cent. In suburbs such as Blackburn, Beaumaris and Mont Albert, median house values have dropped by as much as 6.9 per cent, while units in Murrumbeena have fallen by 7.1 per cent.

The downturn is particularly relevant to many members of Melbourne's growing Nepali community, who have purchased family homes or investment properties across Melbourne's eastern, south-eastern, western and northern suburbs over recent years.

Property analysts say a combination of recent interest rate increases, changes to negative gearing and capital gains tax announced in the Federal Budget, and weak consumer confidence have placed additional pressure on Melbourne's housing market.

Cotality's Head of Research, Tim Lawless, said Melbourne has become more vulnerable than other major Australian cities, with its median property value now sitting well below Sydney and even below Brisbane, Adelaide and Perth.

Industry experts believe higher-priced suburbs have been affected the most, as buyers of larger family homes are more sensitive to rising borrowing costs. Auction clearance rates have also remained below 60 per cent, indicating softer market conditions.

What does this mean for Nepali property investors?

For Nepali investors who already own investment properties, the decline in property values could reduce equity in the short term, making it more difficult to refinance or leverage existing properties to purchase additional investments. However, unless they are planning to sell, the fall in value remains largely on paper. Investors with stable rental income may choose to hold their properties until the market recovers.

For those looking to enter the investment market, softer prices may create opportunities to purchase quality properties at lower prices than were available a year ago. Investors should, however, carefully consider higher interest rates, borrowing costs and ongoing holding expenses before making a purchase.

What does this mean for Nepali owner-occupiers?

Many Nepali families purchased homes during Melbourne's strong property boom. While seeing property values decline can be concerning, owner-occupiers who intend to stay in their homes for the long term are generally less affected by short-term market fluctuations.

For families planning to upgrade to a larger home, the current market may actually work in their favour. Although they may sell their existing home for less than expected, the property they are buying may also have fallen in price by a similar or greater amount.

What does this mean for Nepali renters?

For Nepali renters, lower property prices do not necessarily mean rents will fall immediately. Melbourne continues to experience strong rental demand and limited housing supply in many suburbs, meaning rental prices are likely to remain relatively high.

However, if lower property prices encourage more investors back into the market over time, the supply of rental homes could increase, helping ease pressure on rents in the longer term. For renters who have been saving for a deposit, the current market may also present a better opportunity to purchase their first home if they can secure finance.

Opportunities for first-home buyers

For Nepali families planning to purchase their first home, the current market may offer greater negotiating power, less competition at auctions and more affordable buying opportunities than in recent years. Buyers who have stable employment and sufficient savings may benefit from taking advantage of softer market conditions.

Real estate agents say there are already signs that buyers are gradually returning to inspections as they adapt to the current interest rate environment, although further rate increases could place additional downward pressure on prices.

While the short-term outlook remains cautious, many experts believe Melbourne's property market could recover once inflation eases and the Reserve Bank begins reducing interest rates. For many Nepali families, the coming months may represent a period of both caution and opportunity, depending on whether they are buying, selling, investing or renting.