Sydney Inner Suburbs Endure Sharp House Price Drops
The prime part of the market appears most affected.
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House prices in some of Sydney’s inner suburbs have lost, in some cases, more than $190,000 in the past three months to February as the market slowdown steepens with poor affordability, tighter lending and higher fixed interest rates according to the latest CoreLogic data.
The Sydney suburb of Beaconsfield, nearby the city’s airport, posted a 9.2% drop in median house values to $1.77 million, the largest percentage decline recorded in any house market in the country. Prices in Beaconsfield are now $162,662 lower than three months ago.
Elsewhere, Newtown saw values fall by 6.6% or $120,207 down to $1.821 million, Surry Hills is down 6.1% to $134,054 to $2.197 and Birchgrove lost 6% or $190,581 to 3.176 million.
According to CoreLogic’s head of research, Eliza Owen, the premium end was more volatile compared to the lower end.
“I think affordability constraints, tighter lending conditions and higher fixed rates have likely been enough to cool premium markets, and the sharpness of the fall relates to the volatility in the high end of the market, and the extremely strong run up in price growth,” she said.
Away from Sydney’s market, Melbourne has seen its own market cooling with house prices in Prahran, Cremorne, South Yarra and Windsor tumbling by more than 5% while Toorak dipped 4.7% during the same period.
According to Ms Owen, the affordable end of the market would continue to outperform the upper end as the broader market begins to slow.
“Based on historical performance of property values, I think the next 12 months should see more steady performance in affordable segments of Sydney and Melbourne,” she said.
“More affordable segments tend to have less volatility in growth rates – the highs are not as high, but the lows are not as low,” she said.
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Ray White’s chief economist outlines her predictions for housing market trends in 2024
2 min
Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.
Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.
“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”
Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”
Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”
3 key housing market trends for 2024
Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.
Luxury apartment market to soar
Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”
Homes to become even greener
The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”
More people living alone
For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
