Sydney suburbs where home values just dropped $300,000

Suburbs in Sydney’s east have experienced the deepest drop in home values over recent months compared with other parts of the city, with the value of a typical house in some suburbs falling $300,000 or more.

Seven out of the 10 suburbs with the largest median house value falls in the three months to June were in the east, with declines running as high as 11.1 per cent, according to new Cotality data. For units, the top 10 biggest value falls were all in the prestige parts of the eastern suburbs, with one desirable beachside spot dropping 8.3 per cent.

This comes as home values across the nation’s capital cities had their biggest fall in almost four years, led by sharp drops in Sydney from a peak in January this year to a median of $1,265,608 now. Market watchers say interest rate settings, cost-of-living pressures, high oil prices and the federal government’s property tax changes have left buyers and sellers cautious.

Tim Lawless, Cotality’s research director, said there had been a “cumulative set of headwinds” influencing the market.

“Starting with affordability and progressing into higher inflation, ultimately higher interest rates, and then Iran happens and confidence fell back to the 1970s oil crisis levels, and then we saw the budget, which was just another downside factor for the market,” he said.

It was the top end of the Sydney market, or the upper quartile, that had been “feeling the pain a little more acutely than other areas of the housing market”, according to Lawless, falling 4.8 per cent over for houses the quarter to June.

Across both property types Coogee houses had the biggest fall by dollar value, down $448,508, or 9.5 per cent, to a $4,290,802 median in just three months.

“It’s not surprising to see markets like eastern suburbs, inner west, featured quite heavily, simply because these are really expensive markets and arguably they have a higher base to pull from,” Lawless said.

“It’s probably some increased sensitivity to higher interest rates across these markets as well, given the high prices.”

Lawless added the current market was an opportunity for those looking to upgrade.

Houses in Chifley, about 13 kilometres south-east of the CBD, had the deepest drop, falling 11.1 per cent, or almost $298,000, to sit at a median value of $2.39 million.

This was followed by the prestige inner west suburb of Balmain East, with a 10.5 per cent, or almost $399,000 decline, and Kensington, in the east, which fell 10.3 per cent or about $351,000.

For units, Tamarama fell most at 8.3 per cent (down about $169,000) over three months, to a median value of $1.87 million. This was followed by Double Bay, down 7.8 per cent or just over $154,000, and Vaucluse, also down 7.8 per cent or just over $128,000.

Sean Poche, an agent from PPD Real Estate who sells mainly in Double Bay, said there was “no doubt prices are softening”.

“A lot of people in Double Bay are happy to sit this out and … maybe see where things are later in the year,” he said. “A lot of people are delaying going to market.”

Martin Farah, a partner and sales executive from real estate agency NGFarah, which covers the south-east of Sydney from Clovelly towards La Perouse, said there was still demand in coastal areas like Coogee, Clovelly and Maroubra but not much supply.

“At the moment, buyers … they’ve basically got a breather on purchasing. Whereas 12 months ago, if you’re a buyer in the marketplace, you felt that you had to really go through the processes and commit in a certain time frame,” he said.

“They’re only purchasing at the right price, if it’s the right value … It’s a marketplace we’re working in at the moment.”

Even so, Farah said not all properties were transacting at lower levels and sales were still getting done, citing an above-reserve sale of a freestanding house at 31 Division Street in Coogee. The auction was brought forward due to demand and ended with 75 bids, to sell at $5,576,000.

“That was a good example of supply and demand. Coogee does not have a lot of freestanding houses for sale but in units … definitely, the buyers have got a choice.”

Anthony Landahl, managing director at mortgage broker Equilibria Finance, said it was “very much a two-tier market” in Sydney, with activity still taking place in the more affordable, first home buyer market.

“Those less affordable areas have really slowed down in terms of activity; buyers are not buying, they’re deferring their purchases, they’ve got more negotiating power at the moment,” he said.

“Sellers aren’t selling because they still want to get the top price, and buyers are waiting for the right property or the right price.”