In a surprising turn of events, house prices in some of Australia’s most esteemed suburbs have dropped compared to last year, offering a chance to secure high-end properties at reduced prices, even as home prices across the country witness a revival following the Reserve Bank’s rate cut in February.
The trend encompasses various affluent areas where the typical home values have decreased by substantial amounts, with some localities noting reductions exceeding $1 million.
According to PropTrack data, notable declines have been observed particularly in areas that rank among the country’s priciest.
For instance, Vaucluse saw a reduction of $1.7m, followed closely by Bellevue Hill and Dover Heights with declines of $1.6m and $1.1m respectively. These areas, mainly situated around Sydney’s eastern suburbs and the lower north shore, demand multimillion-dollar budgets even for entry-level homes.
Outside of Sydney, other regions also recorded significant home price drops.
Austinmer and Toorak, leading expensive suburbs in Wollongong and Melbourne respectively, saw reductions of up to $600,000.
The Mornington Peninsula’s Sorrento and Bellarine Peninsula’s Barwon Heads also experienced notable home price falls, attributed to the real estate boom during the pandemic which later subsided as interest rates increased, PropTrack reported.
The decline in home prices, particularly sharp in these high-value areas, is partly due to the high base from which prices are falling.
However, the rapidity of these declines, ranging from 15% to 18% in just a year, underscores a broader market recalibration influenced by rising interest rates.
Despite these decreases, the overall Sydney house market grew by 3% during the same period, reflecting a mixed economic landscape.
Even though select suburbs saw price declines, the broader high-value market in Australia mostly witnessed stability or growth.
“In many of our top-end suburbs we have seen pretty significant growth,” said Anne Flaherty (pictured), senior economist at REA Group. “In two thirds of suburbs with median prices over $2m, we saw prices either grow or stay steady.”
Flaherty noted that the buying capacity of people looking to purchase in higher-value suburbs is often less impacted by high interest rates compared to the rest of the market.
“We know there’s a lot of people selling to buy a new home and may have the equity behind them to help support those higher purchases,” she said.
The recent cut in interest rates might signal a market upturn, improving buyer confidence as evidenced by a spike in the Westpac-Melbourne Institute Consumer Sentiment Index.
While the immediate future may not see a flurry of further rate cuts, the real estate market is expected to stabilise, offering potential relief and opportunities for buyers and investors alike.
Despite recent dips, the long-term outlook for these suburbs remains positive.
Historical data shows substantial home price increases over the past five years, with some suburbs like Vaucluse and Bellevue Hill significantly up since the pandemic began. This enduring growth underscores the enduring appeal and value of investing in these premier locations, PropTrack reported.
