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Ritzy coronavirus suburbs could see property prices plummet

Bondi has been one of NSW's coronavirus hotspots. Images: Getty, NSW Health

NSW suburbs with the highest number of coronavirus cases may also be the worst-hit by a coronavirus-induced property downturn, if historical trends hold up.

Affluent local government areas including Waverley and Woollahra have been named NSW’s coronavirus hotspots in new data from NSW Health this week.

The Waverley local government area includes Bondi, Bronte, Vaucluse and Tamarama and is home to 105 of the state’s 1,405 confirmed Covid-19 cases. The median house price in the suburb of Waverley is $2.07 million, according to Realestate.com.au data, while the median house price in Bondi is $2.63 million. 

The Sydney CBD has 69 cases and the northern beaches has 68 confirmed cases. 

Fellow beachside region, Woollahra, has 66 confirmed cases, and includes suburbs like Double Bay, Paddington and Point Piper. Point Piper is considered one of Australia’s most expensive suburbs. There, the median unit price is $3.5 million. 

The figures come after an outbreak among backpackers in Bondi - one of Australia’s most significant tourist hotspots. Bondi also drew angry reactions after large crowds were seen gathered on the iconic beach in recent days. 

Cases by local health district. Image: NSW Health

More broadly, the south eastern Sydney region has 350 cases, while northern Sydney has 270. The only region across NSW with no confirmed cases is far west NSW. 

Downturns affect affluent suburbs first, and hardest

AMP Capital chief economist Shane Oliver has warned that if coronavirus pushes Australian unemployment to 10 per cent, a 20 per cent fall in property values is on the cards.

Ratings agency Standard & Poor’s has also flagged a “sharp correction” for property values across Australia.

During the Global Financial Crisis, premium housing markets saw the greatest declines in values. Sydney’s eastern suburbs saw values fall 14.0 per cent, while the Northern Beaches and North Sydney also saw values topple 10.8 per cent lower.

The same trend was recorded across Melbourne.

And in the 2010 property downturn, expensive regions across Sydney also saw the largest falls in value, and the most recent downturn also saw expensive properties experience the sharpest declines in value.

Too soon to say

While in recent years premium suburbs have seen property values fall and rise faster than most, this downturn may well be different, CoreLogic head of Australian research Eliza Owen said.

“Property transaction volumes are likely to fall in the coming months, but the outcome for values depends on temporal expectations around coronavirus, and longer-term employment conditions,” she said.

“In the short term, the coronavirus and subsequent share market declines have already had a significant impact on consumer confidence. This may lead to postponed dwelling purchases, as housing is an expensive, high commitment purchase decision.”

She noted that the ‘house price expectations’ index has fallen by 6,6 per cent in March.

In fact, it could be Sydney’s inner-west, where homes still sell for $1 million - $2 million, that is hardest hit.

“There are likely to be parts of Australia where housing demand, including rental demand, will fall more sharply than others,” she said.

These may be areas where workers are unable to work from home and might need to sacrifice income if social distancing is required. Areas where many are casual workers and regions with many workers employed in affected industries will also be affected.

“Looking at the concentration of the workforce in accommodation and food services for example, points to pressure on households in Sydney’s Inner West, which has the highest portion of workers employed in this sector by SA4 region (12.7 per cent at November 2019).”

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