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Sydney

Australian suburbs see biggest price drop since COVID-19 outbreak

This is known as the COVID housing boom. Australian house prices and unit prices plummeted when the pandemic began.

However, data shows that prices in some suburbs have fallen from peak levels earlier in the year, with double-digit declines and some returning to levels below March 2020, when the pandemic hit.

Sydney and Melbourne have lists of suburbs that are currently below recorded early COVID-19 values.

Brisbane is also slightly on the list.

These are suburbs across Australia, where home and unit values ​​have returned to pre-pandemic levels.

Sydney suburbs Darlinghurst (-13.7%), Surry Hills (-12.8%), Forest Lodge (-9.7%) and Redfern (-9.7%) saw the steepest declines in median house prices since the pandemic. Hit, CoreLogic’s numbers show.

In Melbourne, Windsor (-14.1%), St Kilda (-12.4%), South Melbourne (-12.4%) and Malvern East (-11.3%) recorded the biggest declines in house prices over the same period.

“Headwinds” for the housing market in 2023

Eliza Owen, head of research at CoreLogic, expects “headwinds and tailwinds for the housing market” in 2023 to deepen price declines.

“I think so. We need to take this downswing further,” she said.

“Many purchases have been made at low fixed rates throughout the pandemic, with fixed loans accounting for approximately 46% of new loans, many of which will transition to higher mortgage rates over the next 6-12 months. .”

Many economists predict further home price declines in 2023, with Shane Oliver, AMP’s veteran chief economist, predicting an average home price decline of 15-20%.

With home prices trending even lower, is it a good time to buy?

It purely depends on your individual situation, says Owen.

“Prices are down right now, but with higher debt costs and fewer property options. If you wait for interest rates to go down, you will probably see prices go up and rental costs going up in the meantime.” she said.

Owen says the data shows prices are falling, and people may be able to buy cheaper than they did six or 12 months ago, but the trade-off is higher interest payments.

Second, borrowing capacity declines.

Interest rates have risen most rapidly since the early 1990s. Rising interest rates this year have reduced the maximum amount a potential buyer can borrow.

“Even if you buy a property with a significantly reduced price, you may end up spending more on your monthly mortgage than if you bought it during the peak of the market,” Owen said.

According to the latest ANZ CoreLogic Housing Affordability report, it takes the typical Australian first-time homebuyer 10.9 years to put aside a savings account, slightly shorter than the previous quarter’s 11.3 years.

Unit “soft landing”

In Melbourne, Kew East’s unit price recorded its biggest drop in the same period, down 18.5% since the start of the pandemic.

Unit prices for Hawthorn East, Ascot Vale, Hawthorn and Moonee Ponds decreased by 18.1%, 17.1%, 16.4% and 16.3% respectively over the same period.

Sydney units fell in Epping (-11.5%), Lakemba (-9.1%), Macquarie Park (-7.9%) and Wiley Park (-7.9%).

Owen notes that the biggest peak-to-valley declines are concentrated in areas where home prices are relatively high and renters are more highly utilized, with some of the more expensive suburbs on these lists. He said it wasn’t all that surprising to see the inclusion of

“Examples include areas such as Wiley Park, Punchbowl and Lake Kumba, which are some of the places in Sydney where the unit market is declining the most,” she said.

Listing activity in these regions doesn’t suggest signs of overstocking or poor sales are pushing prices down, Owen said, suggesting the change was “more on the demand side.”

The Australian unit market is widely expected to be weaker than the housing market, Owen said.

“Partly because unit prices did not rise as much during the COVID-19 period, resulting in fewer price adjustments as interest rates rise,” she said.

https://www.abc.net.au/news/2022-11-27/australian-housing-market-suburbs-largest-decline-in-value/101687906 Australian suburbs see biggest price drop since COVID-19 outbreak

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