Forex · Capitals Wire
Auction clearance rates have been around the 40-55 per cent mark since the May federal budget. Picture Monique Harmer Falls in Sydney home prices have been accelerating amid warnings of further interest rate hikes, with weaker conditions spreading to areas that had previously been insulated from the ongoing housing slump. Exclusive figures from realestate.com.au, the first full quarter of suburb-by-suburb value movements since the May federal budget, have revealed house prices fell across nearly 97 per cent of Sydney suburbs over the past three months, with only six suburbs recording growth in values.
An average of more than $90,000 was wiped off home values over the period in close to 125 areas, or about in five Sydney suburbs. It’s a marked change from the initial stages of the slump, seen in the months before the May budget, when falling home values were largely consigned to the upper and middle-tiers of the market. Price falls have spread to outer suburban areas that had previously been insulated from the slump.
MORE: ‘Worst in Aust’: Sydney tenants’ horror rent hike Recent falls were also widespread across Sydney’s apartment market, which had previously been less impacted by the slump. Unit values dropped in 81 per cent of suburbs with available sales data over the quarter, according to the realestate.com.au automated valuation figures. The rare suburbs that saw growth in unit values were mostly luxury inner city areas, with cheaper western suburbs recently recording some of the largest value drops.
Some of these recent falls have been enough to pull values back down to levels last seen in 2022 and 2023, in some areas. REA Group economist Eleanor Creagh said downward pressure could continue across markets that had, until recently, still been growing. “Stretched affordability and higher borrowing costs are tempering the previously stronger markets,” Ms Creagh said.
“Further price falls are likely over the coming months as (interest) rate rises, tax changes and the cumulative impact of higher borrowing costs weigh on demand.” MORE: Aussie 21yo can’t own TV in landlord’s $2k bill threat SuburbData analyst Jeremy Sheppard said demand would stay depressed across all buyer groups for some time because government reforms to negative gearing and capital gains tax had created a climate of uncertainty over price movements, even for those not directly affected by the reforms. “In times of uncertainty, most buyers retreat to the sidelines,” he said. Suburbs with some of the largest recent falls in unit prices, ranging from 8-18 per cent over the quarter, included a range of outer- and middle-ring areas.
They included Heathcote, on the southern fringe of the Sutherland Shire, along with, further north, East Hills and Picnic Point. Telopea and Berala, in the Parramatta region, also had considerable falls. Heathcote’s slump erased close to four years of price gains.
The suburb’s median house value was recorded at $958,000 in September, nearly level with what it was back in 2022. Agents report a general climate of uncertainty across the market. Picture: Sarah Wilson Another major shift occurred across the Blacktown region, an area that had still been attracting high demand from buyers even after interest rate hikes earlier this year due to the relative affordability.
Realestate.com.au showed some of the region’s cheapest suburbs recorded major price drops averaging 6-8 per cent, or about $50,000-$90,000, in Whalan, Dharruk, Shalvey, Blackett and Mount Druitt. “This was an inevitable part of the downturn cycle,” said Kent Lardner, head of research at analytics group FoundIt. “Interest rate rises, (federal) budget tax reforms and everything that’s going in the world economy have been a perfect storm for the housing market.
It first hit the wealthy suburbs, now it’s spread out.” The largest falls in nominal terms were across the house market on the north shore, eastern suburbs and northern beaches. Buyer’s agent Rebecca Hall revealed she has negotiated steep discounts. Picture: John Appleyard House values in eastern suburb Paddington dropped by an average of $262,000, or 8 per cent, while in nearby Surry Hills the fall was about $220,000, or 10 per cent.
Other areas where house values lost an average of more than $150,000 over the three months were north shore suburbs St Ives, St Ives Chase, Beecroft and Neutral Bay, plus Bondi and nearby Dover Heights. Buyer’s agent Rebecca Hall has been negotiating an array of property deals for recent purchasers at steep discounts and said buyers who were willing to make offers were getting rewarded. “No one knows when the market will bottom out but we are seeing some purchasers come back in just because of how good value many properties now are,” she said.
Ms Hall, the director of buyers’ group Hallmarq, said home sellers were realising buyers simply didn’t have the borrowing power they did last year and have had to revise their expectations sharply. “Someone who could pay $2.5m last year, can now only pay $2.3m, and may now only want to actually spend under $2m,” she said. “It’s often quite a shock for homeowners who may been used to seeing their home values go up every year.” MORE: Distressed property listings surge across Australia
Source: Real Estate
