House prices fall in desirable suburbs of Clovelly, Cremorne, Cammeray

PRD Chief Economist Dr. Diaswati Mardiasmo said buyers and sellers in suburbs with multimillion-dollar prices were spooked by rising interest rates and had thought twice about how much to spend and what the repayments would be.

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While high-end markets led to price declines, they would still be out of reach for most Australians, she said. The bigger improvement for shoppers would be in middle-class suburbs, which could become more accessible to young professionals.

“A drop in mid-range or more affordable suburbs makes people think, ‘Hey, maybe I can get in there now and broaden my search,'” she said.

Powell said prices held up better in more affordable markets for the most part, as rising interest rates limited buyers’ ability to borrow and pushed home seekers towards more affordable prices.

However, the annual growth rate in such suburbs slowed, Powell said, as prices retreated from their peaks.

Median house price gains were largely recorded in more affordable outer suburbs, although there were exceptions.

The Central Coast suburb of Erina saw the largest increase in house prices at 31.6 percent. Denham Court, Gledswood Hills and Edmondson Park in the southwest, Grantham Farm and Marsden Park in the west, and Wentworth Falls in the Blue Mountains all saw increases of more than 20 percent.

The downturn has allowed Mary-Anne Lines to buy a one-bedroom Pymble unit after 35 years of rentals, but it’s still been harder than expected.

Lines started looking for property 18 months ago and feared she may have missed her chance when she saw prices soar.

When the 61-year-old saved up her deposit, prices fell, but the suburb’s median unit price was still 6 percent higher than in 2021.

Lines, head of payroll at a healthcare company, noticed a price drop in April last year.

“I was really lucky not to be ready to buy [at the peak]. I think prices may still fall, but I really had to buy when I did,” she said.

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“I don’t want to work forever.”

She still had to cast her net far and missed two properties. The fear of overpayment was also an issue.

“I couldn’t afford Neutral Bay [where I rent] but I looked everywhere else on the route and to the northern beaches where my daughter lives. However, the northern beaches were way out of my price range.”

Her buyer, Lucy Bulla of Brady Marcs Buyers Advisory, said one-bedroom units in the area had significant price declines, but two-bedrooms were selling better.

Bulla said the downturn largely reflected the market boom. Areas that once had exponential growth, like the northern beaches, later had sharp falls but were still well above pre-boom levels, she said.

“The average home there saves you $200,000…other than that, the borrowers are still in the same place [due to less borrowing power].”

While prices had fallen, she found median sales value was also being affected by the quality of available homes, with fewer A-class properties – which held their value best – coming up for sale amid the downturn.