As reported by the Australian Financial Review, house prices in a few of the inner suburbs of Sydney, like Surry Hills, have dropped by more than $190,000 in the past three months to February.
This is all according to CoreLogic figures, so this isn’t something the Review has made up. We’ve been waiting a while for prices to drop, so let’s explore by how much.
Beaconsfield saw the largest drop at 9.2% in median house value to $1.77 million. Prices on average are now $162,662 lower than they were three months ago. Newtown house prices fell by 6.6% ($120,207 drop to $1.821 million), Surry Hills fell 6.1% ($134,054 drop to $2.197 million), and Birchgrove fell 6% ($190,581 drop to $3.176 million).
CoreLogic’s Head of Research, Eliza Owen, said that the pricey areas are currently more volatile compared to the lower end, but it’s the ridiculous growth we had that has now lowered demand. As she states, “I think affordability constraints, tighter lending conditions and, higher fixed rates have likely been enough to cool premium markets, and the sharpness of the fall relates to the volatility in the high end of the market, and the extremely strong run up in price growth. I think it’s a reflection of how strong the upswing in the more expensive central markets has been.”
Unit prices fell too with Barangaroo getting hit the hardest with an 8.5% drop to $2.292 million. The Rocks also dropped 5% to $1.55 million.
The same trend has been observed in Melbourne too with the inner suburbs of Prahran, Cremorne, South Yarra, and Windsor all dropping by more than 5%.
Does this mean that house prices in general are going to drop? Maybe not just yet as it should be noted that the higher end of the market is volatile and often doesn’t represent the general trend in the market. However, that does not mean a drop in house prices isn’t coming, it just probably won’t be as impressive as the drop observed in the premium market.