Residz Team 3 min read
Home buyers in Australia’s largest city are essentially shopping at a ‘10% off’ sale.
That's how much prices have dropped in Sydney since the market peak, according to new data from CoreLogic. The report shows Sydney home values are down -10.1% - equivalent to around $116,500!
In such a market, buyers are increasingly confident to ask for vendor discounts and more repairs before signing.
And Sydney is not the only city off the boil. Data shows Melbourne and Brisbane have dropped 6% since their own peaks.
More falls likely to come
The news comes on the back of an Australian Financial Review story revealing RBA documents outline how house prices in Sydney and Melbourne are likely to fall by 1.5% a month through the rest of 2022.
Ronald Mizen, economics correspondent for AFR, says in his article ‘Secret RBA modelling shows 20pc drop in house prices’ that the record house price growth last year could be almost completely wiped out by the end of 2024.
“Prices could fall 20 per cent from their peaks if people become increasingly pessimistic about the property market.
“But the national drop could be even larger, at 20 per cent by the end of 2024, depending on how people respond to both the fall in prices and to even higher interest rates.”
The RBA documents were released by the bank under Freedom of Information.
Downturn in all capital cities bar one
For Australia’s home owners and sellers, it’s hard not to be pessimistic about the property market.
Six cash rate hikes in a row and reduced borrowing power of buyers have led to a downturn in all capital cities except Darwin.
As CoreLogic’s research director Tim Lawless says it is unsurprising Sydney leads the downturn given it’s the most expensive capital city housing market and “arguably has the greatest susceptibility to rising interest rates.”
At its peak, Sydney surged around 28% or roughly $252,900 in the city’s dwelling values from COVID-trough to peak. But once interest rates started rising, home prices started dropping.
“The pace of decline accelerated sharply following the first interest rate increase in May,” he said.
Melbourne and Brisbane losing value
Now home sellers across the country are being asked to be realistic about their price expectations. The CoreLogic daily index shows Melbourne’s values are second to Sydney, falling -6.4% since their peak in January this year, and Brisbane is down -6.1% since its peak in June.
Meanwhile, CoreLogic’s monthly Home Value Index shows Hobart and Canberra are down -4.7% and -4.4% respectively since their month-end peaks.
Mr Lawless says the good news for Sydney home owners is that the rate of decline has moderated through October.
Home sellers showing caution about listing
One reason suggested for this moderation in the rate of decline is that the ‘spring selling season’ is off to a slow start in Australia.
Mr Lawless said:
“We’ve seen the flow of fresh listings continue to slide through the first month of spring, which is uncommon for this time of the year.
“It seems prospective vendors are prepared to wait out the housing downturn, rather than try to sell under more challenging market conditions.
“We haven’t seen any evidence of distressed sales or panicked selling through the downturn to date; in fact, it has been the opposite, with the trend in newly-listed properties continuing to diminish at a time when freshly advertised stock levels would normally be moving through a seasonal ramp up.”
With fewer homes for sale, low rental vacancy rates, and more overseas people settling in Australia, the property market may yet remain relatively robust.
But, if it does keep falling, will first home buyers finally get a property?
Residz can help buyers and sellers reduce the stress: