Property prices see 'significant decline' in some suburbs and regions despite housing market rebound – ABC News

Property prices see 'significant decline' in some suburbs and regions despite housing market rebound
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Property prices "defied expectations" to hit record high values this year, but some suburbs and regional areas have bucked the trend and seen "very significant declines" in their median house prices in the past 12 months.
Data compiled by PropTrack, the property analytics division of REA Group, found that some suburbs saw median house prices drop by more than 10 per cent in the past year, despite house prices in most capital cities rising every month of the year.
PropTrack economist Anne Flaherty said the housing market was experiencing a correction after a surge in buying demand during the pandemic, which has led to "very significant declines over the past 12 months" in some suburbs.
The biggest decline in house prices in the past year were in the suburbs of greater Hobart, with Carlton — around 25 kilometres east of the Tasmanian capital — seeing a 13.3 per cent fall in the last 12 months.
House prices in the nearby suburbs of Dodges Ferry, Sorell and Primrose Sands all fell by more than 11 per cent year-on-year, while Kurrajong Heights, around 80km north-west of Sydney, was the only suburb outside of Tasmania to see the biggest fall in price growth.
"Hobart really dominates the list of suburbs that have been big price drops over the past year, [and] I think that the reason for that is to do with the fact that during the pandemic, Hobart massively outperformed," Ms Flaherty said.
"Buyer demand was incredibly hot in and around greater Hobart, and that saw property prices rise very rapidly.
"However, it is a smaller city and since that time, we have seen demand cool off significantly, so that's reduced buyer demand.
"Add that to the impact of high interest rates, and we've seen prices correct."
That trend had also started to spread to regional parts of Australia where average property prices tend to be more affordable, but areas with median house prices well over $1 million had also seen a decline in value over the past 12 months.
"For example, Mullumbimby and Ocean Shores, both have a median price point of over $1 million, so it's the same thing … these were areas that really outperformed during the pandemic," Ms Flaherty explained.
"There were a lot of people looking to buy in regional areas and moved to regional areas.
"That demand has now slowed, and so what we've seen is that prices have come back with that reduction in buyer demand."
The reversal of the property buying trend during the pandemic — and the associated higher prices — reflects the changes in demand and borrowing capabilities.
"What this comes down to is that competition to buy in these suburbs was so high during the pandemic years that buyers were basically just upping and upping their offers, and of course, interest rates were extremely low at that time, so people had greater borrowing capacities," she said.
"Now we've seen that it's not as competitive, so it's taking properties longer to sell in these areas, and we've seen prices come back as a result of that low demand."
After another year plagued with higher interest rates and the rising cost of living, property prices around the country went from strength to strength.
Nationally, the median house price rose by 5.4 per cent in 2023 — "a new peak level", Ms Flaherty said.
That growth was largely driven by a surge in demand for property in capital cities, with house prices rising by 6.5 per cent in the 12 months to November. Comparatively, house prices in regional Australia rose by a modest 2.6 per cent.
"The story of the past 12 months is that house prices have defied expectations in 2023," she said.
"We've had 13 interest rate rises, which have reduced borrowing capacities by around 30 per cent. Despite that, property prices nationally have increased between January and November, and are sitting 5 per cent higher compared to where they were a year ago."
Australian real estate is set for a double-dip downturn, according to a leading analyst, as interest rates finally weigh on property prices and for-sale listings surge.
Despite rising property prices and the decline in property values in some suburbs, Ms Flaherty said there was little evidence that it was connected to higher levels of mortgage stress from rising interest rates.
She said it was possible that prices could dip slightly in 2024 as interest rates collide with property prices, a slowing economy and growing population, but it was likely that demand for housing would remain strong as supply stayed limited and would therefore keep prices elevated.
"The fact that property prices have been so resilient with interest rate rises shows that there's still very strong buyer demand out there, and the supply of homes for sale just hasn't kept level with that buyer demand," she said.
"While we have seen price corrections in a lot of areas, in those areas that are continuing to see stronger buyer demand, particularly in our greater capital city areas, we might start to see prices recovering in the areas they've fallen.
"The fact is that the need for somewhere to live is going to lead people to fork out more and more of their salaries to pay for housing.
"It's important to remember that not everyone is equally exposed to higher interest rates, because over 40 per cent of home owners don't even have a mortgage, so if they're looking to sell and buy again, they're in a very strong position."
Ms Flaherty said Australia's property market would be "very resilient" in the coming year, even as interest rates moderate, as the rate of new housing falls behind the speed at which the country's population is forecast to grow.
"So that means whatever economic challenges we face, the reality is people need somewhere to live.
"That demand for housing is going to continue to support [high] rents and property prices into 2024."
She said the focus in the coming year to ensure housing remains affordable and accessible is to increase the number of properties being built, and making them available for purchase or to be rented out.
"Fundamentally, we absolutely need to increase the speed at which we can develop new housing to keep up," Ms Flaherty said.
"We already have a housing shortage, and given what we're seeing at the moment, it looks like that housing shortage could worsen.
"Ultimately, increasing supply is the only long-term solution to making housing more affordable and accessible."
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