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Home buyers across dozens of Sydney suburbs can spend less on a property than they would have a year ago, with six-figure price declines recorded in some areas.
Unit prices fell in almost one in five Sydney suburbs over the year to June, Domain data shows, and house prices were down in several suburbs.
Home buyers across dozens of suburbs can buy for less than they did last year, but experts warn A-grade properties are still selling well.Credit:Peter Rae
House prices fell 10.3 per cent in Sylvania Waters to a median of $2.6 million, and dropped 8.9 per cent in Cremorne to $2.85 million, both dropping by more than $275,000.
Prices also fell 1.6 per cent in South Wentworthville, the only other suburb where house prices declined annually. Only suburbs with a minimum of 50 sales were included.
Domain chief of research and economics Dr Nicola Powell said prices were still up across most suburbs over the year, but many were past their peak rate of growth.
“Overall Sydney is still up annually, but we’re starting to see a change in market conditions and that will ripple across suburbs at varying rates,” Powell said.
Sydney’s median house price dropped 2.7 per cent last quarter to about $1.55 million, but was still 8.3 per cent higher year-on-year. Unit prices declined 0.6 per cent to almost $791,000, but remain 0.4 per cent higher than a year ago.
Powell said house prices would be more vulnerable, having soared 40 per cent from trough to peak during the pandemic, while unit prices rose 9 per cent.
She said areas with a greater supply of “cookie-cutter apartments” had typically seen less growth in the owner-occupier led property boom, and may fall into negative territory sooner.
Little Bay recorded the largest price falls for units, with its median down 28.4 per cent to $815,000. It recorded some of the strongest growth the previous year, and agents reported an increase in one-bedroom apartments had skewed the median down.
Prices fell more than 10 per cent in Kogarah, Sylvania and Eastwood, and more than 5 per cent in suburbs like St Marys, Woolloomooloo and Erskineville.
DJW Property Sylvania Waters principal Dave Watkins said the increased supply of homes for sale had reduced competition. As had rising interest rates which made buyers nervous and cut borrowing power.
“Prices have come back an easy 10 per cent for generic non-waterfront homes,” he said, but noted that A-grade properties had seen little change.
In other suburbs, prices are much higher than a year ago and the strongest growth has been in lifestyle locations. The median house price in Erina jumped 64.7 per cent, and fellow Central Coast suburbs of Long Jetty, Ettalong Beach and Tumbi Umbi also had prices rise more than 40 per cent.
Median unit prices rose most in Darling Point, up 50 per cent, and Newport, Avalon Beach and The Entrance were also among the biggest gains.
Barrenjoey senior economist Johnathan McMenamin said price falls were largely driven by the end of low fixed-rate home loans, and the Reserve Bank’s warning that the cash rate could rise sooner than expected. The full impact of the three consecutive rate hikes that followed, had yet to be seen.
He expected prices nationally to fall 13 per cent from peak to trough, and further in Sydney. Price falls would be sharpest in the coming months, and were unlikely to halt until early 2024 – following an expected cash rate cut in late 2023.
“That would be the longest and largest national house price decline on record,” McMenamin said.
The top quarter of the market should have sharper declines, he added, though a pick-up in investor activity combined with a pull-back in sellers amid lower prices, could moderate declines.
Hannah Hooper hopes price declines in Cremorne will make it easier to buy a home in the suburb. Credit:Rhett Wyman
Price falls were welcome news for upsizer Hannah Hooper, a 29-year-old investment advisor at Stockspot, who also used the service to invest. She sold a two-bedroom apartment in May and hopes to buy a three-bedroom townhouse with her partner in suburbs like Cremorne or Neutral Bay.
While previously unattainable homes have fallen into their price range, the pair expect their borrowing power to fall when they renew their pre-approval. Still, they are in no rush.
“I would hope to get something in the next six to 12 months … hopefully house prices will continue to fall further and that should counterbalance that rate rise and the fact we’re not able to borrow as much.”
Buyer’s agent Peter Kelaher, managing director of PK Property, said more buyers and sellers were sitting on the fence, waiting to see the full impact of rising rates. However, he warned buyers would have little luck with lowball offers, and should be wary of trying to pick the bottom of the market.
“This is not the time to pick up a compromised property, it is the time to pick up an A or B-grade property at a C-grade property price,” he said.
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