$800k hangover: Sydney real prices plummet in New Year market - what your home is now worth

A ‘Jekyll and Hyde’ housing market has shaved up to $800,000 off the value of homes in parts of Sydney. See what property in every suburb is now worth.

Homeowners are staring down 2023 with a massive change in fortune as new modelling reveals house values in many Sydney suburbs fell dramatically – by up to $800,000 – following a tumultuous year of soaring interest rates and rising inflation.

The advanced PropTrack data provided exclusively to the Saturday Telegraph has laid bare the Jekyll and Hyde nature of the market, showing values rose in roughly a third of the market while falling in the rest.

There were 19 suburbs where values fell by at least $500,000 over the year and 100 where the drop was $300,000-$500,000.

The biggest drops were in suburbs across the east, northern beaches and inner west, while Sydney’s outer western suburbs were among the few regions where values inched up over the year.

Expensive coastal areas had led the explosion in prices seen across Sydney during 2021 when rock-bottom interest rates and increased time at home during Covid lockdowns ramped up buyer demand.

Ocean St, Narrabeen where a house recently sold for $310k less than the 2021 price. The suburb had the biggest price falls annually.

The recent drops have reshaped the price landscape across Sydney. At this time last year, close to one in six of Sydney’s circa 600 suburbs had a median house value above $3m. Now it’s about one in nine.

Experts said the dramatic price falls over 2022 were the result of reduced homebuyer budgets as interest rate rises and cost of living pressures forced households to rein in their spending.

Families also prioritised travel and other spending over housing purchases after nearly two years of social restrictions.

Beach suburb Narrabeen, 10km north of Manly, had the biggest price drop, according to PropTrack’s automated valuation model.

The average value of a house in the suburb fell by $809,000 for the year, or about 23 per cent. The median price in the suburb is now $2.7m.

There was a similar $803,000, or 22 per cent, fall in the average property value in nearby suburb Ingleside.

Outer western suburbs Oakville, Box Hill, Llandilo and Orchard Hills were among the areas with the biggest rise in value, with increases ranging from 7-17 per cent for the year.

PropTrack economist Eleanor Creagh said there was a flight to affordable markets and this was forcing down home values in areas like the northern beaches, while leading to rises in the outer west.

She noted buyers’ borrowing capacity has shrunk nearly 30 per cent due to the Reserve Bank of Australia’s successive interest rate rises and many of the prices seen in once popular coastal suburbs were no longer tenable.

“That tightening in interest rates has really weighed on prices,” she said.

“Conditions are now very different to how they were at this time last year. Interest rates were much lower then and there was still an overhang in activity due to lockdowns so (buyer) demand was much higher.”

Buyer’s agent and PropertyBuyer director Rich Harvey said the full impact of rate rises may only be felt later this year.

Mr Harvey explained in a 2023 Property Outlook report that the large number of homeowners coming off low fixed rates and onto higher variable mortgage rates in the middle of the year will be a key test for the market.

Tas Theoharis, with wife Suzie and kids Elias, Kailani, and Genevieve, recently drew out some equity in their home. Picture: Tim Hunter.

“Some property owners will panic and sell out while others will make adjustments to hold steady and absorb the higher repayments,” he said.

Even homeowners on variable rates have been making adjustments.

Bankstown resident Tas Theoharis recently refinanced his home loan to get a better rate and said the sheer pace of rate rises forced his hand.

“The first couple of rate rises we were prepared, but we didn’t expect it to keep jumping the way it did,” he said, adding that having substantial equity in his home helped.

“We bought in 2014 and compared to what we paid, the value is a lot higher so we had more room to consolidate the loan … in Bankstown the prices haven’t dropped as significantly as other areas because it’s still relatively affordable.”

Mortgage Choice research showed one third of mortgage holders planned to refinance their loan in 2023.

Oakville was one of the few areas where prices rose.

Mortgage Choice Penshurst/Hurstville broker George Boustani said many buyers who purchased in the last six-12 months couldn’t refinance to a better rate even if they wanted to as they had too little equity in their properties.

Homeowners who purchased their properties before the start of the pandemic were in a better position as most still had a fair amount of equity, Mr Boustani said.

The average value of Australian real estate remains about 23 per cent higher than it was in early 2020, according to PropTrack.