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Property values in a swathe of Sydney postcodes have already pulled back to pre-pandemic levels, new data shows.
House values in almost two dozen suburbs, many in the inner west, have erased their pandemic gains, although units across Sydney have borne the brunt of the falls.
More units have fallen below March 2020 levels than houses simply because they’re more abundant in the city.Credit:Peter Rae
Buyers looking in these areas may begin to find better opportunities, although it will be a tougher time for sellers and refinancers who bought in these locations two years ago on thin deposits, experts say.
Darlinghurst house values pulled back the most, falling 13.7 per cent below their March 2020 levels to a median of $1,941,463 by October 2022, CoreLogic figures reveal.
It was followed by houses in a range of postcodes in the inner suburbs and inner west, including Surry Hills (down 12.8 per cent to $1,780,412), Forest Lodge (down 9.7 per cent to $1,889,551) and Redfern (down 9.7 per cent to $1,622, 270).
Alexandria, Newtown, Camperdown and Erskineville fell more than 8 per cent each.
More suburbs recorded a fall to pre-pandemic levels for units rather than houses, especially higher-density neighbourhoods.
Epping recorded the largest drop for units, down 11.5 per cent to a median value of $771,630.
It was followed by dozens of high-density postcodes in the city’s inner south-west, west and north, including Macquarie Park (down 7.9 per cent), St Leonards (down 7.2 per cent), Rockdale (down 6.1 per cent) and Parramatta (down 5.3 per cent).
CoreLogic head of research Tim Lawless said the suburbs where house prices have fallen below pre-pandemic times were also ones that led the boom.
“These areas are quite often a bellwether, they lead the upswings and lead the downturns as well,” he said.
“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.”
Lawless said house prices in these suburbs are likely to come out of the downturn better.
“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.”
There are about two dozen postcodes where house prices have lost their gains during the pandemic.Credit:Peter Rae
But unit-heavy postcodes have wiped out their pandemic gains due to bigger price falls when COVID-19 first hit, followed by weaker price growth since then, he said.
For buyers, it can mean better buying opportunities – even better for investors as rental markets are tighter than ever before, he said.
But it’s a different story for recent home buyers who need to sell or refinance in these suburbs.
“[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.”
Michelle May Buyer’s Agents principal Michelle May said there are opportunities for buyers to purchase at 2020 prices or below, a contrast to six to 12 months ago when records were being smashed week in and week out.
“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,” May said.
“There are other situations where we knock everyone out and still buy under reserve. There are definitely buying opportunities back at 2020 levels.”
She said there have been many recent examples of sales below 2020 prices too.
But it all came down to the property in question, May said, with A-grade property still performing better than units, which are in plentiful supply due to new construction in many of these suburbs.
”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,” she said.
Luke Camilleri at Mortgage Choice Parramatta said it was more of a buyer’s market for anyone looking in the Parramatta region.
“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,” Camilleri said.
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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