Homebuyers flee capital cities for more affordable areas

Homebuyers are moving away from the expensive capital cities to more affordable areas on the urban fringe or in regional towns.

Prices in Geelong are up 11 per cent. Picture: Alan Barber.

Homebuyers are moving from ­expensive suburbs in the cities to more affordable areas on the urban fringe or in the regions, sending prices soaring even as the broader market cools.

Sydney house prices over the past year posted their sharpest fall since the global financial crisis as banks clamped down on lending to riskier borrowers, but ­demand held up on the central coast to the north, where buyers could find better value.

Outside Melbourne, Mornington Peninsula and Geelong recorded strong price growth, while Hobart prices continued to climb as mainland buyers flocked to the cheaper capital.

 

The capital-city flight comes as prices in the Sydney market lost a further 0.3 per cent last month, for a 4.5 per cent fall over the past year, according to property ­researcher CoreLogic.

Melbourne prices fell 0.4 per cent last month. National prices were down 0.2 per cent.

CoreLogic research analyst Cameron Kusher described the housing market as mixed, with capital cities appearing “pretty weak” but regional areas showing some strength.

“All the tightening of credit we’ve seen, it does affect the other cities, but at a macro level it affects Sydney and Melbourne much more so because housing’s much more expensive,” he said.

 

Hobart’s market has soared as buyers on the eastern seaboard look to the island state’s more affordable stock, with prices jumping 12.7 per cent over the past year.

The research found demand spilling from cities to nearby ­regions. In Victoria, Geelong was up 11 per cent and the Mornington Peninsula up 7.3 per cent.

Sydney featured nine of the top 10 areas recording the biggest drop in prices, with Ryde down 7.4 per cent and the inner west down 7.2 per cent.

Century 21 chairman Charles Tarbey said first-home buyers were active and the more affordable end of the market was not facing the same pressures as more expensive suburbs.

Prices in the two most expensive capitals are tipped to fall further, particularly if mortgage costs rise, although the Reserve Bank is expected to keep the cash rate on hold today and well into next year.

AMP Capital chief economist Shane Oliver predicts price falls of about 15 per cent in Sydney and Melbourne from peak to trough, with regional centres set to hold up better.