More "drastic reductions" ahead, expert warns
House prices in nearly 40% of Sydney suburbs have already dropped by more than 10% since the Reserve Bank started its aggressive rate-hike program in May, with more likely to follow, according to new data from CoreLogic.
Values also tumbled by more than 10% in only five months in 22 suburbs in Melbourne and Brisbane, and in 43 areas in regional New South Wales, according to a report by The Australian Financial Review. Nationally, 327 suburbs have shown a 10% price drop, or 9.4% of all suburbs analysed.
CoreLogic research director Tim Lawless said that although the predicted 20% peak-to-trough drop in Sydney housing values wasn’t a certainty, some suburbs were getting closer to the mark.
“Whether prices will fall by 15% to 20% citywide is still highly uncertain and really depends on where interest rates land and how the economy shapes up through the rest of the year,” Lawless told AFR. “What’s almost certain is that housing values will continue to trend lower, at least at a macro level, until interest rates find a ceiling. Some suburbs of Sydney are already down more than 15% in value, so it’s highly likely there will be some areas where housing values reduce by more than 15% to 20%.”
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House prices in Narrabeen on Sydney’s northern beaches have plummeted 19.5% in just five months, taking prices down by $584,739 – the largest decline of all suburbs in the country, AFR reported. Other northern beaches suburbs have also posted steep declines. Bayview saw a drop of 16.6% during the same time period, Balgowlah fell 16%, and Wheeler Heights posted a drop of 16.5%.
House prices in Taren Point and Kurnell in Sydney’s south also tumbled, falling by 17.1% and 17%, respectively.
“The sharp declines were skewed towards the more expensive markets, those located close to the water or in a blue-chip inner-city location,” Lawless told AFR. “In many cases, these were the same areas that recorded a larger-than-average rise in values through the upswing, which helps to explain the larger decline.”
Amanda Gould, founder of Sydney-based buyer’s agency HighSpec Properties, said there has been a drop in buyer demand as interest rates continue to rise.
“Buyers are holding off because they think prices will fall further, which is impacting the sale prices of many properties, particularly in the northern beaches,” she told AFR. “My parents just sold their house there and got $1.94 million. If they went to market last year, they could have sold it for $2.8 million. I think we’re going to see drastic reductions in sale prices in the months ahead, as the downturn has some ways to go.”
