Premium Suburbs Feel Price Pinch
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Premium Suburbs Feel Price Pinch

Affordability constraints, credit crunches and a flood of listings are affecting growth.

By Terry Christodoulou
Wed, Nov 10, 2021 11:51amGrey Clock 2 min

House prices have fallen across 7% of suburbs in the past three months.

This dip is a contrast to the March peak when just 1.4% posted a decline and according to analysts is the work of a surge in new listings, affordability constraints and tightening credit conditions.

Data from CoreLogic indicates mining towns and some regional markets that experienced the strong upswing earlier in the year have also posted the largest drops.

The volatility in these markets has seen prices slump by 10.3% in South Hedland in WA’s East Pilbara region during the past three months.

House prices fell by 4.7% in Millars Well and Pegs Creek in West Pilbara while units were weakest in West End in Townsville where values fell by 6.6%, East Fremantle in Perth a 4.2%.

However, it’s not an issue isolated to the regions with some of the country’s more premium suburbs feeling the punch.

The high end of the housing market – where dwelling values were about $1 million or more.

Since peaking at 3.5% monthly growth in March, the top 25% of the market by value has slowed to 1.5% through October.

By comparison, the middle market has slowed from 2.2% to 1.7% and the lowest segment 1.5% to 1.3% during the same period.

During the three months ending October house prices in the tony suburbs of Melbourne, including Armadale, Mont Albert and Blackburn posted declines of 0.5%, 0.4% and 0.1% respectively.

In Sydney, Waverley, in the city’s coveted eastern suburbs was the weakest premium market with house prices gaining just 0.7% over three months.

According to Eliza Owen, CoreLogic’s head of research, the slowdown is due to affordability constraints and a glut of listings.

“The volatility at the high end of the market, demonstrated by the rapid decline in growth rates, suggests this segment can also expect a larger downturn in property values.”

“The housing market is well and truly past its peak for the current cycle, and it makes sense that as more headwinds accumulate, price increases will continue to slow, and more suburbs may see an adjustment in price,” she said.

“This comes back to borrowing constraints associated with the increased loan serviceability buffer from APRA, as well as banks proactively tightening lending conditions,” Ms Owen added.



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London’s Luxury Property Market Turns a Corner

After more than a year, prices have finally levelled out in prime central London, while outer London saw a small uptick in high-end prices from the previous quarter

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The first quarter of the year brought some long-awaited signs of recovery in London’s luxury housing market, offering the first positive quarterly price growth since September 2022, according to a report from Savills on Wednesday.

After six consecutive quarterly price falls, luxury home prices in central London levelled out in the first three months of the year, with a 0.1% quarterly uptick in prices. The £3 million to £5 million (US$3.79 million to US$6.32 million) market saw a slightly larger increase of 0.3%.

Outer London’s luxury market saw greater quarterly price growth, with home prices up 0.8%, as some stability returned to mortgage costs and lured more buyers back to the market, according to the report.

All of this is evidence that the market is “in early stages of recovery,” according to Lucian Cook, head of residential research at Savills.

“The outlook for the housing market has certainly improved, partly because the mortgage market has recovered more quickly than expected,” Cook said in the report. “With the first rate cut rapidly coming into view and recessionary risks easing, greater stability has returned to the cost of mortgage debt, which has positively impacted domestic prime markets, where many buyers rely on borrowing, most notably in leafy outer prime South and West London, as well as the commuter belt.”

Outside of London, prices across the U.K. saw no quarterly growth heading into the beginning of the spring market, which is expected to bring higher levels of buyer activity in many regions.

Suburban regions saw prices dip just 0.1%, while urban areas—like Edinburgh and Glasgow in Scotland, and Bath and Oxford in England—saw prices increase by 0.6%.

Cook said regional buyers are more likely to be concerned about market uncertainty than London buyers in the lead up to the general election.

“As a result, buyers are still expected to be less committed until the dust has settled,” he said.

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