House prices in some of Sydney’s inner suburbs have slumped by more than $190,000 in the past three months to February as the market slowdown accelerated amid poor affordability, tighter lending and higher fixed interest rates, CoreLogic data shows.
Beaconsfield posted a 9.2 per cent drop in median house value to $1.77 million, the largest percentage decline recorded in any house market in the country. Prices are now $162,662 lower than three months ago.
Newtown house prices fell by 6.6 per cent or $120,207 to $1.821 million, Surry Hills dropped by 6.1 per cent or $134,054 to $2.197 million and Birch-grove lost 6 per cent or $190,581 to $3.176 million.
Eliza Owen, CoreLogic’s head of research, said the premium end was more volatile compared to the lower end, but the very high growth recorded earlier in the cycle has also dampened demand.
“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.
“I think it’s a reflection of how strong the upswing in the more expensive central markets has been.”
In Melbourne, house prices in inner suburbs Prahran, Cremorne, South Yarra and Windsor tumbled by more than 5 per cent, while Toorak dropped by 4.7 per cent during the same period.
In the apartment sector, prices in Barangaroo plummeted by 8.5 per cent, while Box Hill in Melbourne’s inner east lost 5.3 per cent. Nerida Conisbee, Ray White chief economist, said many home buyers were now struggling with the higher home prices.
“The number of buyers has been reduced significantly because of affordability issues,” she said. “I think many buyers simply can’t afford houses because they’re now too expensive and people’s ability to pay such large sums have diminished somewhat.”
While some premium areas such as Sydney’s Rodd Point still racked up a strong gain of 7.3 per cent during the past three months, the more affordable, outer ring suburbs have dominated the quarterly best performers.
House prices in Silverdale in Sydney’s outer west rose by 6.9 per cent, Camden South and Leppington added 6.3 per cent and Asquith gained 5.7 per cent.
In Melbourne, the top performing house markets were all located on the Mornington Peninsula, such as Safety Beach, Dromana, Tootgarook and Mount Martha which notched house price growth between 5 per cent and 5.8 per cent in the past three months.
In Brisbane, suburbs with median values under $1 million posted the largest rise in house values in the past three months. Kooralbyn and Logan Central notched more than 14 per cent growth each, while Eagleby, Sheldon and Beaudesert rose by more than 13 per cent.
In the unit market, New Port in Adelaide west logged the highest quarterly rise of 11.7 per cent, followed by Tanah Merah and Waterford in Brisbane’s Logan area with 11.1 per cent and 11 per cent growth respectively.
Ms Owen said the affordable end of the market would continue to outperform the upper end as the broader market slowed.
“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, and possible regional markets of Australia,” she said.
“This is because 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.
