The suburbs where house prices are falling

Is this the beginning of a beautiful opportunity?

Is this the beginning of a beautiful opportunity?

Property prices have fallen by hundreds of thousands of dollars in some inner city suburbs since January.

Experts say it represents the start of a broader decline in housing costs.

According to analysis by PropTrack, for a unit in the Sydney suburb of Earlwood, prices have fallen almost $70,000 in the first four months of the year. In the exclusive suburb of Castlecrag, on Sydney's lower north shore, a home costs about $312,000 less than it did in January.

A unit in Huntingdale in Melbourne's southeast costs about $60,000 less and in Middle Park in inner Melbourne by about $73,000. A home in the inner Melbourne suburb of Ripponlea is priced at about $121,000 under what it was four months ago.

There are also falls of almost 10% in Adelaide, Brisbane and Darwin. 

PropTrack's Director of Economic Research Cameron Kusher said the larger price drops, which were happening in more expensive suburbs of Sydney and Melbourne, represented the beginning of a more general downturn in the housing market.

"This is something we do tend to see at the start of the downturn. It is that top end of the market which slows first and then it filters down into the more affordable areas," Kusher said.

"The outlook is that the prices will continue to fall over the coming months and in year."

And why are prices falling?

Interest rates have already gone up and are expected to rise further in the near future. As interest rates rise, people can borrow less money from the bank, which means they can spend less on a home. 

Sadly, however, it’s not likely property prices will return to pre-pandemic levels - having risen a whopping 35.1% in the two years we were locked up at home.

The Reserve Bank of Australia (RBA) forecasted property prices to fall about 10% over the next two years if interest rates were to rise by 2%.

In early May, interest rates rose from a historic low of 0.1% to 0.35%. 

Kusher added: "Even though we're expecting property prices to start to fall, we're not expecting any easing of the rental pressures, particularly in the capital city markets."

PropTrack's analysis defines metropolitan regions in each state as 70 to 100km from the city centre in some cases.