Suburbs where house prices have fallen: is now a good time to buy?

Several coveted suburbs have seen a drop in property values in the last 12 months – some by up to 20% - according to new data from CoreLogic. Homebuyers may be wondering if this is the right time to consider buying.

Sydney suburbs topped the list with the greatest fall in house values in the year to November 30, according to CoreLogic’s 2022 Best of the Best report.

The research showed that dwelling values in Sydney are down overall by 11.4% from their peak, with Melbourne and Brisbane dwelling values falling 7.1% and 8.1% respectively.

Sydney suburbs where home prices have fallen

Narrabeen, in Sydney’s Northern Beaches, saw values drop by 26.8% to a median of $2,592,772. This was followed by a 25.4% decrease in Surry Hills to $1,789,868 and a 25.3% decrease in Redfern to $1,612,519 – both inner city suburbs.

Source: CoreLogic Best of the Best 2022

While this is still a considerable median value when compared to national prices, more expensive markets typically show greater declines in market corrections. 

CoreLogic Australia’s head of research Eliza Owen said: “More expensive housing markets tend to be associated with higher levels of debt to income, so that’s why Sydney in particular may have been more sensitive to the rising rate environment.” 

“Sydney’s inner-city suburbs tended to be more volatile due to higher concentrations of investment activity. More speculative buying could lead to more extreme value changes, adding many of the areas had strong uplift during the boom,” she said.

Melbourne suburbs where home prices have fallen

Hurstbridge topped the list of Melbourne suburbs where home values dropped the most in this same 12-month period, falling 17.6% to a new median value of $842,393. This was followed by Brunswick West (17.2%) and Highett (16.3%), which saw their median values fall to $1,253,515 and $1,384,886 respectively. 

Source: CoreLogic Best of the Best 2022

In an interview with Domain, Ian Mason, director of Mason White McDougall in Hurstbridge, said of these figures: “there was more demand for family homes than for entry-level properties, but did not think values were down as much as 17%”.

“In the four-bedroom family home [market], we are still seeing great demand. What we have seen slow down is probably the lower end of the market, the first home buyer places that are small and need work – they have definitely come back in price,” he said.

Entry-level properties were in greater supply, Mason said, noting “first home buyers might be looking to cheaper areas nearby due to concern about rising rates”.

Is now the time to buy property?

It’s not just the latest CoreLogic Best of the Best report that’s indicating prices are falling in some suburbs. CoreLogic’s Home Value Index for November recorded the seventh month of decline in values, with Sydney still the only capital city where housing values have fallen by more than 10% from their peak. 

CoreLogic also reported that although values are “continuing to trend lower”, the rate of decline has been “consistently moderating since the national index dropped by -1.6% in August”.

However, this is in tandem with the eighth month in a row of Reserve Bank of Australia hikes to the cash rate. Meaning that even if prices are falling, the borrowing power of first home buyers has been reduced in this higher-rate environment

If you’re considering purchasing property, it may be worth checking how much you could be approved to borrow before you decide if now is the right time to buy.

RateCity’s Borrowing Power Calculator could help you by calculating an estimate of what you may be approved to borrow, based on your financial situation and the current market.

RateCity.com.au research director, Sally Tindall, warned: “The RBA rate hikes have the capacity to apply a significant handbrake to Australia’s property market”.

“If the rate hikes keep coming, as they’re forecast to do, people could find their home buying budgets shrink further and further. Anyone planning to take out a new home loan in the coming months needs to carefully consider how much debt they take on,” Ms Tindall said.

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