House prices in some inner and middle ring suburbs across capital cities are likely to have peaked as early as September last year, as demand waned amid a surge in listings and heightened worries about the war in Ukraine and interest rates, analysis by Suburb-trends shows.
Almost one in three housing markets nationwide have posted a drop in selling price in the three months to February, and almost four in 10 suburbs within the 40-kilometre radius from the central business districts have also weakened.
Sale prices have been falling in these markets for months, indicating they may already have hit their peaks, said Kent Lardner, director of Suburb-trends.
“We’re seeing a large number of listings hitting the market in those areas, so there are now more sellers than buyers, which triggered a drop in sale prices,” he said. “On average, the markets in our sample that are now past their peaks and within 40 kilometres of the city have recorded a rise of 42 per cent in listings count.”
In Sydney’s eastern suburbs, the median sale price has dropped 17 per cent in the past three months and is now $650,000 lower than the prices achieved last November, as the number of listings jumped 66 per cent.
House prices are likely to have peaked during the three months to December when they rose to $3.9 million. Since then, the median sale price has fallen to $3.8 million in January and is now down to $3.15 million.
In Manly, median house prices have dropped by 5 per cent, or $200,000, to $4.1 million after likely peaking at $4.3 million in January.
In the past three months, listings numbers have climbed by 74 per cent.
During the three months to February, sale prices in the Marrickville-Sydenham-Petersham district had fallen by 3 per cent, or $50,000. Prices probably peaked in September last year at $2 million. Since then, prices have steadily fallen to the current $1.85 million.
Sydney-based buyer’s agent Jack Henderson said the persistent negative news about the Ukraine war, interest rate rises and the property market have dampened buyer demand.
“The negative news has likely taken out around 30 per cent of buyers because they are concerned about what’s going to happen with the housing market, the war or interest rates,” he said.
“Because there are now fewer buyers, we’ve been able to negotiate good deals such as the property we recently bought in Erskineville. Four months ago, the vendor was asking for $1.2 million but couldn’t find a buyer. It went to auction recently, and we’re able to buy it for $1.1 million after being passed in. So, it’s not surprising to see selling prices fall in many of these areas.”
Amanda Gould of HighSpec Properties said the number of agents reducing the listed price had risen in the past few weeks.
“I’ve never seen so many agents emailing me about price reductions since the onset of the pandemic,” she said.
“I think they’re struggling to get buyers because of the uncertainties. You have the war, then the election and buyers tend to hold off buying when there’s a looming change in the market.”
In Melbourne, median house prices in the Bayside district in inner Melbourne have also likely peaked at $2.215 million in October. Since then, prices have been falling consistently to the current $1.935 million.
In Unley in inner Adelaide, house prices have likely peaked at $1.475 million in the three months to January, but prices have since dropped to $1.355 million.
Prices are likely to weaken further across more areas if the rise in listings volume is not matched with increase in demand, Mr Lardner said.
“Interest rate rises will determine much of what happens next,” he said.
“The pipeline of supply via new building approvals for about 24 of the markets analysed is above average, which will push up listings volumes even further.
“However the biggest impact will be on the demand side.
“As listings volumes start to increase, we need to see a proportionate number of buyers entering the market. If this does not happen, we will see further price falls.”
