While most of Australia’s property market is going from strength to strength, some pockets across the nation’s capital cities are experiencing double-digit house price falls, new Domain data has revealed.
Between March 2019 and December 2020, house prices in southern Sydney suburb Barden Ridge and western Sydney’s Colebee fell by 16.2 per cent and 11.7 per cent respectively.
Similarly, Collaroy, Campsie and Dover Heights prices dropped by 9.3 per cent, 9.1 per cent and 8.7 per cent respectively.
During the same time period in Melbourne, Lower Plenty and Wonga Park dropped by 15.9 per cent and 11.1 per cent, while Warrandyte also saw double-figure price falls of 10.3 per cent.
Why did house prices fall in these areas?
Different suburbs will move through stages of the property cycle at varying times, said Domain senior research analyst Nicola Powell.
The major cities’ ritzier inner suburbs led the downturn, and hit a trough earlier than outer suburbs and more affordable locations.
But even among pricier areas, there are certain suburbs that do conform to broader property trends in surrounding areas due to “micro-dynamics that are different at the suburb level”, Powell explained.
“Sydney and Melbourne reached a trough in early 2019 but this was led by the more expensive suburbs,” she told Yahoo Finance.
While some areas of the property market were at its lowest points, Sydney suburbs Colebee and Barden Ridge were “recording only minor price falls at this time” – and Melbourne’s Lower Plenty and Wonga Park were even posting positive, though minor, annual growth.
But the rate of price decline in these suburbs started gathering momentum just as the rest of the property market was picking back up, said Powell.
“This period of time captures the entire downturn and not the recovery unravelling in other suburbs during 2019 and into 2020,” she added.
Is this a buying opportunity?
Price falls in these areas aren’t expected to continue for long, however.
“Given record low interest rates, the strength in buyer demand and the stage of the price cycle within these particular suburbs, they are likely to commence a recovery. Colebee and Lower Plenty posted an annual increase at the end of 2020,” Powell told Yahoo Finance.
For some Australians, the low prices in these areas may represent a buying opportunity.
“When you look at the suburb level, there are some suburbs where prices are still lower than they were in March.
“It offers affordability because some are extremely expensive suburbs – but it [still] provides opportunity because prices are lower,” she said.
Before a purchase is made, buyers should understand where the property is in the property cycle and what the future prospects are for growth, Powell added.
“Some of these suburbs are now showing annual growth. With all the other factors in Sydney being positive, it’s likely we're going to continue to see a recovery in prices in these areas."
CoreLogic’s monthly property figures will be released tomorrow and further price rises are widely expected, with AMP Capital chief economist Shane Oliver anticipating Sydney price will rise by 4 per cent.