Boom to bust: home prices plunge in key Sydney suburbs
Property prices in some of the city's most coveted suburbs have plummeted over the past year despite falling interest rates igniting another surge in real estate values across the rest of the market.
Median price falls of up to $750,000 in coastal and well-connected inner suburbs have largely been the result of buyers turning to more affordable markets amid cost of living pressures.
This reduction in demand – at a time of rising listings – has put pressure on sellers in up-market areas, while buyers in these markets had more room to negotiate.
PropTrack data indicated the largest falls over the past year were in eastern suburbs Vaucluse, Waverley, Woolloomooloo and Darlinghurst and in northern beaches suburbs Manly and Fairlight.
Prices in these markets all fell by an average of more than 14 per cent over the past year, which given the inflated prices, delivered buyers significant savings.
Manly house prices were an average of close to $750,000 lower than a year ago, while in neighbouring Fairlight the difference was about $600,000.
Other suburbs with major falls, reported at between 10 and 14 per cent, were Cammeray, Cremorne, Gordon, Kirribilli, Neutral Bay and Lindfield, on the north shore.
There were also large price falls for units in southern suburbs Blakehurst, Woolooware and Kingsgrove and for houses in Glebe and Strathfield South, in the inner west.
REA Group economist Eleanor Creagh said a complex set of forces pushed down median prices in many up-market areas, but one of the biggest factors was looming uncertainty about the global economy.
'Buyers in some premium markets may have been more cautious,' she said.
'These buyers are typically less sensitive to mortgage rates and more responsive to broader macro-economic factors.
'With recent uncertainty around the economic outlook and volatility in equity markets, some high-end buyers may be exercising caution (and) delaying upgrade decisions.'
Ms Creagh said this contrasted with a recent rise in spending across the cheaper end of the market.
'More affordable markets … have seen renewed activity since the Reserve Bank's February and May rate cuts, with improved borrowing capacity lifting prices.'
Ms Creagh noted that some annual price figures may be somewhat skewered by weakness in the market late last year, just prior to rate cuts, and shifts in the types of homes getting sold.
Auctioneer Damien Cooley – the director of Cooley, one of Sydney's biggest auction houses – said the type of housing stock coming to market was playing a part in prices.
'A-grade' homes that ticked all the boxes for buyers were still selling well even in up-market areas.
But there was also a high share of listings for 'C-grade' and 'D-grade' homes – properties with major drawbacks – and these were struggling.
'Sellers of C-grade homes are getting crucified,' he said. 'Buyers are not interested in a lot of these properties unless they can get them for bargain basement prices.'
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