Buy the dip: these blue-chip suburbs are within reach

House prices in some of the nation’s most expensive suburbs are lower than they were a year ago, creating a chance to buy into premium markets for less.

This Dover Heights property is just one example of how the nation’s most expensive suburbs are cheaper than they were a year ago. Courtesy of TRG.

Typical houses in several pricey suburbs are selling for hundreds of thousands of dollars less than they were a year ago, and in a handful of suburbs median house prices have dropped by more than $1m.

PropTrack data shows that many of the suburbs with the biggest house price declines in the past year were among the most expensive in the country. Several of these were clustered around Sydney’s eastern suburbs and lower north shore, where even entry-level homes require multimillion-dollar budgets.

Don’t miss your copy of the April issue of Mansion magazine inside The Australian on Friday, April 25

The biggest house price declines were in Vaucluse (down $1.7m), Bellevue Hill (down $1.6m) and Dover Heights (down $1.1m). To put those numbers into perspective, in the past year the value of a typical Sydney house rose by 3 per cent, or about $40,000, to $1.437m, according to the latest PropTrack Home Price Index.

An ocean-view home at 32 Wentworth Street in Sydney’s Dover Heights is for sale with an asking price of about $15m through Cae Thomas of TRG. Picture: Supplied

Outside Sydney, prices declined by $600,000 in Austinmer, the most expensive suburb in Wollongong, while Melbourne’s priciest suburb, Toorak, recorded a drop almost as large.

There were also big falls in Sorrento (down $525,000) and Barwon Heads (down $465,000) outside Melbourne.

Are prices falling at the top end of town?

Despite declines in some of the most expensive suburbs, prices rose or remained steady over the past year in two-thirds of the$2m-plus suburbs.

“In many of our top-end suburbs we have seen pretty significant growth,” says REA Group senior economist Anne Flaherty.

Even though median prices have fallen recently, most of these suburbs are still well up over the long term.

An inside look at 32 Wentworth Street, Dover Heights.

Since the onset of the pandemic, Vaucluse is still up $2.855m, while Bellevue Hill is up $2.863m.

Changes in the types of homes that were selling in a particular suburb could have an effect on its median price – if fewer ultra-expensive homes sold, that could bring the median price down.

“Composition has a bigger impact than we would see in other suburbs,” Flaherty says.

“The homes in these suburbs have incredibly high prices, so depending on which homes head to auction, there’s a greater spread of price points.”

Where to from here?

The April issue of Mansion magazine is out on Friday, April 25.

The February interest rate cut marked a turning point in the market. While the boost to borrowing capacities due to a 25-basis-point cut is relatively modest, the start of the rate-cut cycle has improved confidence.

Home prices in Sydney and Melbourne rose in March after declines over prior months, PropTrack data shows.

The Westpac-Melbourne Institute Consumer Sentiment Index reached a three-year high in March, with a big lift in the number of people who think it’s a good time to buy a home.

With market conditions improving, it’s unlikely that the recent softness in pricey suburbs will last long, potentially giving buyers a limited opportunity to buy during the dip before the next leg up.

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This story is from the April issue of Mansion magazine, out on Friday, April 25.