Amid the boom, there are pockets of value appearing

Most real estate markets across the country are booming but there are homes in some parts whose sellers are finding reasons to lower their prices. A potential bargain hunters' guide.

The view from 4 Gap Rd, Watsons Bay. Its sales campaign has been brought forward.

While the real estate market across the country has boomed since the start of the pandemic, there are homes in some parts of Australia that have languished unsold for months with sellers forced to reduce their prices.

The standout example was a luxe apartment in Sydney in the ANZ Tower that was listed with a price tag of $66m in 2018, only to change hands this year for $60m with Ian Malouf buying.

Commonwealth Bank says dwelling prices could drop by as much as 10 per cent as higher interest rates cut in, while ANZ reckons prices for Sydney dwellings will fall 4 per cent and Melbourne by 2 per cent over the next few years.

In order to avoid a potential slump in prices, vendors are now offering pre-Christmas discounts while others are bringing forward the listing of their properties for a December auction rather than trying their luck early next year.

As such, some disparate parts of Australia have never looked such good value.

In Sydney’s eastern suburbs, Ray White Double Bay agent James Ledgerwood said there had been a recent unprecedented increase in residential supply. Coupled with that, there was still buyer demand, but some vendors were finding that they were having to discount from prices that may have been a little inflated.

“In the last two weeks some vendors have brought their sale campaign forward to a December auction because by early next year they want to be cashed-up buyers ready for the new stock that comes on the market,” Mr Ledgerwood said.

The owners of a fully renovated three-level beach cottage fronting 4 Gap Rd, Watsons Bay, which has a price guide of $3.9m and sports harbour views, have brought forward their sales campaign to a December 8 auction through Mr Ledgerwood.

4 Gap Road, Watsons Bay.

4 Gap Road.

Nationally, CoreLogic head of research Tim Lawless said instances in which prices had actually fallen over the past year had been rare across Australia. CoreLogic research reveals there were only three suburbs around the country recording drops in dwelling values, including apartments and houses, over the year.

The places recording a dip in dwelling price value in the 12 months to October are two Queensland regional towns of Millmerran and Dalby and an outer suburb in Perth.
In Milmerran prices fell 3.7 per cent, and in Dalby ­prices fell 1.1 per cent.

In the Perth outer southwest suburb of Karnup, values fell 2.4 per cent to a median of $436,781.

“Such a small number of suburbs where values have reduced over the past year reflect the broad-based strength in housing market conditions,” Mr Lawless said.

However, he added: “Separating the dwellings data by houses and units shows the unit sector remains softer, with more suburbs recording a drop in apartment values over the year. The weaker performance across the unit sector has been a long-running trend, driven by a preference shift towards lower-density housing options, previously low levels of investment activity and, in some cases, higher supply levels.

“Looking forward a year, this list (of areas where prices are slumping) will be a lot larger. I expect to see a larger number of suburbs many of which will be in the negative growth rate, given the upswing we have seen in the past year.”

Mr Lawless said the unit market was softer because, given the pandemic, there had been a preference away from medium and higher-density living. There were also fewer investors given rents had been falling, coupled with an oversupply of units in some areas.

Suburbs with a negative change. Source: CoreLogic

In the year to October, units in Unley, in Adelaide’s inner south, produced the worst drop in Australian residential markets, falling 5.7 per cent to a median of $464,512, while Adelaide city units fell 1.4 per cent and Parkside recorded a 0.4 per cent decline to a median of $462,267.

In Queensland, apartments in suburbs such as Waterford West fell 3.8 per cent to a median of $200,131, while Loganlea units fell 3.2 per cent to a median of $288,741. The popular inner Brisbane suburb of Highgate Hill was not immune, with unit prices falling nearly 1 per cent to $584,839, according to the CoreLogic data.

There were also price falls for units in Melbourne, with values for those in Murrumbeena dropping 1.7 per cent to a median of $636,807 and in the city’s inner south, Ormond produced a drop in prices of nearly 1 per cent to a median of $647,380 per unit.

Melbourne suburbs such as Malvern and Elsternwick also recorded price falls, albeit minimal, in median unit prices.

In Western Australia, the regional city of Bunbury, about 175km south of Perth, also produced a small decline in unit values, to $374,464.

On the house front, Queensland and to a much lesser extent Western Australia were the only two states where there was a fall in prices.

The small Darling Downs town of Millmerran, 82km southwest of Toowoomba, recorded a 3.2 per cent fall to a median house price of $201,141. Nearby, Dalby saw house prices fall 0.7 per cent to $241,989. Townsville house prices, specifically in the suburb of Mundingburra, produced a 0.4 per cent fall to $329,946 in the 12 months to October.

In Western Australia the suburb of Karnup recorded a house ­price fall 2.4 per cent during the year to $436,876.