From Northern Beaches to Inner Sydney: suburbs with falling property prices revealed

There are several sought-after suburbs where property values have already begun to fall, including in the Northern Beaches and inner Sydney, with some suburbs seeing quarterly losses up to 7.2%.

According to the latest CoreLogic data, house values decreased in more than two dozen suburbs in the city as well as the inner south region. Unit prices in the Northern Beaches saw sharp falls, with up to 4% value decreases in Curl Curl, Freshwater, Forestville and Queenscliff.

Sydney suburbs with dwelling value decreases over past quarter

Source: CoreLogic.com.au

Beaconsfield recorded the sharpest quarterly decline in values for houses of 7.2%, followed by Zetland at 6.3%. For units, the largest quarterly value decrease was felt in Cremorne Point at 5.8%, followed by Curl Curl at 4.6%.

But it’s not good news for first home buyers just yet, with the median values of these dwellings still sitting well above $1 million. To address issues of affordability, many would-be buyers may still be looking for more affordable suburbs or holding out for greater declines to dwelling values, as forecast by the banks and financial experts.

CoreLogic Research Director, Tim Lawless, said: “We’re seeing more evidence that the market is moving into its downturn phase.”

“A lot of these areas were leading the upswing, or arguably they’ve got a higher base to fall from and maybe overshot fair value … [but even] if we see values fall by 5 or 10 per cent, that’s only wiping off six to eight months of growth for these suburbs,” Mr Lawless said.

Why are property prices on the decline?

There are several reasons that property prices may be approaching a decline after years of eye-watering increases.

Australians have been facing higher costs of living as of late, with the war in Ukraine and recent flooding events in New South Wales and Queensland impacting food and fuel prices. Growing inflation levels means less disposable income and fewer savings for Australian households, so saving up for a house deposit has become more challenging.

The fact that wage growth has remained relatively stagnant in comparison to property price increases means that it has gradually become harder and harder for would-be buyers to save up a deposit for a property or purchase it outright.

Further, interest rates are expected to hike as early as June this year after years of rock-bottom rates on home loans from continuous cuts to the Reserve Bank of Australia’s cash rate since November 2010.

When a cash rate hike occurs, would-be buyers may find it harder to gain approval for the same loan amounts as they once could, as higher interest rates and mortgage repayments means harder mortgage serviceability testing.

This is why it’s more important than ever to factor in a competitive interest rate and/or lower fees into your home loan comparison when purchasing your first or next property. In fact, RateCity research shows that 3 in 4 borrowers will need to cut back on expenses when the RBA eventually hikes rates to afford their new higher repayments.

If you’re looking to apply for a home loan in 2022, make sure that you’ve done your research around the best interest rates for your budget and goals.

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