Sydney Property: According to fresh data, property values in a large portion of Sydney postcodes have already returned to pre-pandemic levels.
Although units all over Sydney have taken the brunt of the drops, house values in nearly two dozen suburbs, including in the inner west, have reversed their previous gains.
Although it will be more difficult for sellers and refinancers who purchased in these places two years ago on thin deposits, buyers shopping in these areas may start to find better opportunities.
What do statistics reveal?
According to CoreLogic data, Darlinghurst property values declined the highest, dropping 13.7% from their March 2020 levels to a median of $1,941,463 by October 2022.
Houses in a variety of inner-suburban and inner-west postcodes, including Surry Hills (down 12.8% to $1,780,412), Forest Lodge (down 9.7% to $1,889,551), and Redfern (down 9.7% to $1,622, 270), came next.
Each of Alexandria, Newtown, Camperdown, and Erskineville saw a decline of more than 8%.
More suburbs, especially in higher-density areas, saw a decline to pre-pandemic levels for units rather than homes.
A number of high-density postcodes in the city’s inner south-west, west, and north, including Macquarie Park (down 7.9%), St Leonards (down 7.2%), Rockdale (down 6.1%), and Parramatta (down 5.3%), saw the biggest decline in unit values, falling by 11.5 percent to a median value of $771,630.
The suburbs where home prices have fallen below pre-pandemic levels were also those that led the boom, according to Tim Lawless, head of research at CoreLogic.
He said, “These areas are quite often a bellwether, they lead the upswings and lead the downturns as well.”
If there is one encouraging sign it’s also that upper quartile, that seems to be losing momentum in the downturn now.
“These are the suburbs that stabilise early and attract buyers to capitalise on that. They’re representing better value now than they might have been a couple of years ago.”
House values in these suburbs are probably going to recover from the recession better, according to Lawless.
“They’ve got inherent scarcity value; they’re well-established suburbs, there’s not many development sites available, especially for lower or medium density options, demand for housing in these areas is likely to be persistent.”
However, unit-heavy postcodes have lost all of their pandemic benefits as a result of greater price drops when COVID-19 first struck and subsequent slower price rise, according to him.
Given the tighter rental markets than ever before, it may offer greater purchasing chances for buyers and even better for investors, he said.
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For recent home buyers in these suburbs who need to sell or refinance, it’s a different scenario.
“[For] those who bought during COVID it will be much harder to refinance unless they had a large deposit … chances are people will be in a more challenging position.”
There are opportunities for purchasers to purchase at 2020 pricing or below, according to Michelle May, the principal of Michelle May Buyer’s Agents, in contrast to six to twelve months ago when records were being broken every week.
May said, “Now we’re buying well within that price range if not below it. We’re definitely getting a lot more opportunities to buy very well for our clients, just by being able to assess the situation. It’s about how good the property is.”
“There are other situations where we knock everyone out and still buy under reserve. There are definitely buying opportunities back at 2020 levels.”
She claimed that transactions below 2020 prices have also occurred often in recent years.
However, it ultimately came down to the property in issue, according to May, with A-grade property still performing better than units, which are in short supply as a result of the new building that has taken place in many of these suburbs.
She said, “Typically, when you buy off the plan, you pay a premium. It’s like buying a new car, when you drive off it immediately drops.”
For those looking in the Parramatta area it was more of a buyer’s market
For those looking in the Parramatta area, Luke Camilleri of Mortgage Choice Parramatta said it was more of a buyer’s market.
Camilleri exclaimed, “Without a doubt, the tables have turned, and I’m finding our buyers are being given an opportunity to negotiate on their terms rather than favouring the vendor when they had the pick of the bunch.”
He said rising rates were still a bigger problem than falling prices whether homeowners were taking out a new loan or refinancing.
“Yes, property prices are coming down, but rates are going up and more than double in some cases. The majority of clients are struggling because of borrowing capacity.”
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