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Planning to purchase? House prices in these four cities are PLUMMETING fast!
After massive growth during the COVID pandemic and interest rate hikes, housing prices in four major Australian centres are seeing their fastest declines on record.
Online real estate site Domain delivered their most recent home price report, providing insights on the current housing market conditions in Australia.
The report revealed that in June, July, and August, house prices in Sydney, Melbourne, Brisbane, and Canberra had the steepest quarterly drops over high-interest rates and rising inflation.
‘The housing market bore the brunt with house prices falling at the fastest pace on record in Sydney, Melbourne, Brisbane, Canberra and across the combined capitals.’ Domain said.
In the four cities mentioned, the average house price was now 4.9% below the price peak reported in March this year, which translates to more than $50,000 in savings for potential homebuyers.
‘At the same time, supply has normalised from its low, providing buyers with greater choice and opportunity to negotiate – something that can also weigh on prices,' they pointed out.
Despite this, prices needed to drop by another 21.3% to erase the COVID boom.
Units across the combined capitals also cost around $24,000 less compared to their December peaks, Domain said.
Domain's Chief of Research and Economics Dr Nicola Powell stated: ‘We’re going through housing market conditions that many buyers and sellers have never experienced in their lifetime.’
‘The mix of interest rate hikes, strong inflation levels and high household debt has understandably had a significant impact on consumer sentiment.’
Even with a sluggish housing market, Powell expects things to clear up soon.
‘With rising overseas migration and short-term visa holders returning, we should start to see an improvement in investment activity which, in time, will provide more rental opportunities.’
‘However, prospective buyers will continue to stick to a more conservative approach by forward planning for any further rate hikes and being mindful of their lower borrowing capacity.’
Let’s take a brief peek at the housing markets of the following capital cities over the last quarter, according to Domain’s report:
Sydney
Median house prices are at $1.5 million, falling 8.3% from their March peak by around $132,000. Despite this drop, the prices are still more than $320,000 above pre-pandemic levels.
Median unit prices sit at $754,812 with the city seeing declines but at a more tempered pace compared to housing. Units are cheaper by $46,000 on average.
Melbourne
Compared to last December, median house prices in Melbourne are at $1 million, down 6% or around $66,000. However, they are still more pricey by about $147,000 compared to pre-pandemic levels.
Melbourne units also saw a slower decline by 5.7% or about ($34,000) compared to city houses at $561,121. Domain says prices are set to meet pre-pandemic levels if trends continue in the city by the end of 2022.
Brisbane
Brisbane average house prices have fallen by 4.3%, about $36,000, compared to last June. These prices, now at $811, 312, are still costlier by around 13.3% compared to pre-pandemic levels.
Units in the city have sustained their trend in terms of average prices, with no change recorded over the last quarter at $451,905. Domain says this might be in part due to buyers who have shifted their preferences from homes to flats in the city.
Canberra
Median house prices in Canberra are at $1.1 million, down 5.8% or by about $70,000 compared to last quarter. Despite the drop, houses are still more expensive compared to pre-pandemic levels by around $320,000.
Median unit prices in the city have seen their steepest declines in over two years, going down 4.2% — about $25,000 — to $572,824.
Key Takeaways
- Online real estate Domain's September home price report revealed house prices in major Australian centres took a nosedive from previous record highs.
- Sydney, Melbourne, Canberra, and Brisbane posted the steepest drops in the last quarter over high-interest rates and rising inflation.
- Potential buyers can save as much as $50,000 with current median prices in the four capital cities.
- Record high inflation rates have dimmed the outlook for the housing market despite expectations that plunging prices might improve buyer sentiment.
Just recently, it was announced that inflation hit a record high of 7.3% over the last year at a pace unseen since 1990, spurring concerns about further interest rate hikes.
This might translate to further declines in house prices as consumers and potential buyers recalibrate their plans over adjustments by the Reserve Bank of Australia.
Meanwhile, the National Housing Accord in the 2022-2023 Federal Budget aims to build one million affordable houses for Aussies but we won’t see this for another five years.
Are you planning on buying a house or unit anytime soon? If so, what is your reaction to this news?
Share your thoughts and opinions below!
Source: YouTube/ABC News