Sydney's top end takes a big tumble but property elsewhere proves resilient

House prices in some of Sydney’s most sought-after suburbs have plunged by as much as $1 million as the nation’s biggest property market comes off the boil. 

In Woollahra and Waverley, in Sydney’s east, median house prices have fallen by $425,600 and $389,400 respectively over the past year. 

House prices in beachside Cronulla, in the city’s south, are $267,800 cheaper than they were a year ago, while houses in North Manly, at the other end of the city, have fallen by $227,000. 

In oceanside Vaucluse, the median house price has fallen $705,000 in the year to January, while in Bellevue Hill, also in Sydney’s east, house prices fell by a whopping $1.03 million — more than entire value of the average Australian home.

Yet it’s far from all doom and gloom — such are the vagaries of the nation’s most expensive housing market. 

Median house prices are so high in some of the harbour city’s most expensive suburbs, that even relatively modest corrections in prices can translate into massive numbers. 

In Bellevue Hill and Vaucluse — Sydney’s two most expensive suburbs — the median house prices are now $10.50 million and $8.3 million respectively. 

Overall, Sydney’s market has come off the boil; according to CoreLogic, dwelling prices fell 1.4 per cent in the three months to 31 January, taking growth for the year to 1.7 per cent. 

Yet many experts say there is likely some more fuel in the tank, especially as interest rates continue fall and when the federal election — which must be held by May — is in the rear-view mirror. 

“Stock is still tight and both the opposition and present government will be fuelling the property market with big carrots for first home buyers,” says buyers’ agent Peter Kelaher, Managing Director of PK Property Search and Negotiators. 

“It’s all on again and will be a busy year after the election,” he told Australian Property Investor Magazine. 

Mr Kelaher said the current lull represented a “calm before the storm”, typical before a federal election. 

“Interest rates are on the way down and we’re expecting a full one percentage drop by Christmas,” Mr Kelaher said. 

“Home loans will be back at 4.99 per cent and we will enter into our next three-year property boom”. 

Currently, Sydney is a tale of two cities, as highlighted in suburb-by-suburb data prepared by CoreLogic for exclusively for API Magazine. 

In the year to January, the ten worst performers for house prices were blue-chip suburbs in the eastern suburbs, inner-west and northern beaches. 

The list of ten worst performers is dominated by suburbs further afield, particularly in the city’s south-west. 

Traditionally, capital city property booms begin in the inner-cities and other blue-chip areas and work their way out — with outer suburbs the best performers at the tail end of an upswing. 

The two best performing Sydney suburbs for house price growth over the year to January were the south-western suburbs of Bonnyrigg and Bonnyrigg Heights, where prices grew 23.1 per cent and 19.6 per cent respectively. 

In fourth place was Cabramatta, also in the south-west, where houses notched-up 17.6 per cent over the year. 

For the ten best performing suburbs, the average house price growth for the suburbs was 17.4 per cent. 

For the ten worst performers, the average house price for the suburbs was 8.7 per cent — yet the dollar figures were much bigger. 

In the ten best performing suburbs, median house prices rose by between $108,700 and $216,440 — an average of $175,600. 

In the ten worst performing individual suburbs, house prices fell by between $226,700 and $1.03 million — an average of $416,000, reflecting that fact those suburbs had substantially higher median prices overall. 

Not that the median house prices of Sydney’s worst performing suburbs were low, from a national perspective. 

Of the ten worst performers, the average median house price was $1.185m — significantly below Sydney’s median house price of $1.474 million, according to CoreLogic. 

The median house price in Bonnyrigg and Bonnyrigg Heights is $1.15 million and $1.21 million respectively and in Cabramatta it’s $1.27 million. 

Yet for all but one of the suburbs — Emerton, in Sydney’s Blacktown — the median house price was above not only the national median house price, but the median house price across the nation’s capitals. In Emerton, the median house price is $796,876.

FOMO could re-energise Sydney market

According to CoreLogic the national median house price is now $878,376, and across the nation’s capitals it is $1.01 million. 

Buyers’ agent Nick Viner, of Buyer’s Domain, said stock levels remained tight, particularly for “good quality homes in inner ring areas”. 

“That is why some of these properties are selling at record prices,” Mr Viner told API Magazine. 

“But if the property is on a main road or requires a lot of work, then it is sitting on the market.” 

He said current market sentiment could be best described as “cautious optimism”.  

Activity would slow between when the election is called and polling day, but later in the year things could pick up amid a “fear of missing out” among buyers and easing interest rates. 

“Good properties are still going to sell for record prices as stock will be low and demand high,” Mr Viner said. 

“FOMO may start to intensify during the second half of the year, particularly if there are further rate cuts leading to upwards pressure for prices”. 

Further underpinning the Sydney market are low property vacancy rates, fuelled by constrained supply and high levels of population growth. This comes despite build-to-rent in Sydney becoming a bigger factor on the development landscape.

According to the Real Estate Institute of NSW (REINSW), Sydney vacancy rates continue to hover at historical low levels, and were at 2 per cent at the end of January, down from 2.2 per cent in December. 

In Sydney’s inner ring, the vacancy rate dropped from 3 per cent in December to 2.2 per cent in January, while in the middle and outer rings vacancy rates rose slightly. 

“The middle and outer rings rose to 2.1 per cent (+0.3 per cent) and 1.9 per cent (+0.2 per cent) respectively,” REINSW CEO Tim McKibbin said.

“Vacancy rates eased slightly across many areas in regional New South Wales over the last month, however, the availability of rental accommodation remains at dire levels.”

Dan Sofo, director of Unicorn Buyers Agents, based in Paddington in Sydney’s inner-east, said buyer optimism had ticked up this year, although many buyers remained less prepared to compromise and were “still very much focused on acquiring the best property”. 

“A trend I saw last year was investors looking to offload the weaker properties in their portfolio, so we felt more stock in the marketplace but not all of it was good,” Mr Sofo told API Magazine. 

“In a nutshell, the quality properties are selling quickly, sometimes at a premium, the rest languishes and is withdrawn.” 

Mr Sofo said the Sydney market overall was balanced, but added, “I wouldn’t be surprised to see the pendulum swing in the sellers’ favour later this year”. 

“Enquiry for our services is at high tide,” he said. 

“There are buyers waiting in the wings”.