Auction clearance rates took another hit on the weekend after it became clear last week that there was likely to be another rate hike. Picture: Sam Ruttyn
Sydney home values have tumbled for the eighth month in a row in a shift that’s stripped an average $131,000 from city home values and plunged prices back to 2021 levels in some suburbs.
Exclusive figures from realestate.com.au revealed city dwelling prices – based on sales of units, townhouses and houses – dropped 0.4 per cent over October and are now an average 6.6 per cent lower than a year ago.
Falls in house prices were substantially more, with the median house value dropping by 8 per cent annually.
It comes as economists warn an expected rate hike on Melbourne Cup Day this week could plunge the property market into the deepest correction since the 1980s.
RBA Governor Michele Bullock is expected to announce a rate hike this week. Picture: Nikki Short
Realestate.com.au economist Eleanor Creagh said a rate increase on Tuesday “will certainly reinforce the downward pressure already weighing on home prices around the country”.
Economist Andrew Wilson of My Housing Market said the current correction had already equalled the intensity of a 2018 slump, the deepest in recent history, and would easily surpass it with only minor, further falls.
This would make the current downturn the worst since 1987, Mr Wilson said, pointing to the Iran War, property tax reforms and interest rates as “headwinds” for the market.
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A typical city house now costs $1.505m, a $131,000 drop from the $1.64m it cost at this time last year, according to realestate.com.au latest Home Price Index released Monday.
Unit prices dropped an average of 0.1 per cent over October and 2.9 per cent over the year, with the median price now at $851,000.
The citywide figures hid a wide variance in price growth across regions – some suburbs in Sydney’s traditional blue chip markets in the east and on the coast had larger falls.
Treasurer Jim Chalmers has come under fire for the timing of his budget reforms, which have put additional downward pressure on prices. Picture: Martin Ollman
In some of these suburbs, current prices are now cheaper than they were in 2021, with recent price falls erasing all of the gains since Covid.
Suburbs where prices (mostly units) are lower than in 2021 include the Sydney CBD, where unit prices are an average of 18 per cent, or about $215,000, cheaper than five years ago.
There was a similar trend in Darlinghurst and Paddington, where unit prices were down a respective 18.1 and 22 per cent over five years.
Other suburbs where units were cheaper than in 2021 were high-density pockets in Sydney’s middle-ring such as Olympic Park, Macquarie Park, Eastwood, Kogarah, Carlingford, Thornleigh and Ryde, among others.
Source: Realestate.com.au Market Trends Oct 26
Ms Creagh said what had started as a downturn consigned to the prestige markets of Sydney and Melbourne had now spread across the country.
“Sydney has now overtaken Melbourne as the capital with the deepest home price correction,” she said.
Canstar.com.au data insights director Sally Tindall said new buyers didn’t have the budgets they did last year.
“This year has been a pretty brutal lesson in just how quickly your home buying budget can change,” Ms Tindall said.
“If the RBA hikes again on Tuesday, someone earning the average wage could see their maximum home buying budget drop by another $10,700.
“Across what would then be five hikes for the year, their borrowing capacity is likely to have been slashed by almost $60,000 since the start of the year.”
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