Prices Will Rise As Stock Levels Fall In These Suburbs
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Prices Will Rise As Stock Levels Fall In These Suburbs

The areas to be hit hardest by falling stock levels.

By Terry Christodoulou
Wed, Mar 23, 2022 3:45pmGrey Clock < 1 min

House prices are set to rise higher again across a number of suburbs such as North Sydney, Stanmore and Freshwater in Sydney as levels fall below one month of stock new research from Suburb Trends.

Elsewhere, Belmont and Highton in Geelong, Victoria, Conder and Evatt in Canberra and Dapto in the Illawarra region of NSW could also post strong growth in the months ahead despite the indicated slowdown in values across the capitals.

Where owners and vendors are holding tight, and inventory levels and days on market are low, it places upwards pressure on prices.

In North Sydney and Mosman, the inventory level has dropped from 1.3 months to under one month in the past year. Only 1.1% of houses changing hands in that suburb while prices are up by 32% in the past year.

In Stanmore, Sydney’s inner west, stock levels have dropped from 2.5 months to under one month in the same period. Only 5.7% of the total housing stock was sold in the past year which has fuelled a 28% price leap.

Collaroy and Freshwater saw only 4.7% of the total housing stock listed for sale triggering house price increases of 39% and 29% respectively.

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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What this ‘median’ 7-figure price tag scores across Australia.

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