Sydney Inner Suburbs Endure Sharp House Price Drops
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Sydney Inner Suburbs Endure Sharp House Price Drops

The prime part of the market appears most affected.

By Terry Christodoulou
Mon, Mar 7, 2022 2:03pmGrey Clock < 1 min

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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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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Predicted increases in value signals strength in local property market.

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