Real estate Sydney: Suburbs where home prices are plummeting

Those who got swept up in the excitement of Sydney’s pandemic housing boom have been reselling their homes for stunning losses as buyer’s remorse grips the market.

Those who got swept up in the excitement of Sydney’s pandemic housing boom have been reselling their homes for stunning losses as buyer’s remorse grips the market.

Those who got swept up in the excitement of Sydney’s pandemic housing boom have been reselling their homes for stunning losses as buyer’s remorse grips the market.

Analysis of recent transactions showed homeowners who splurged last year resold their properties for up to $700,000 below the inflated prices they paid in 2021.

Home sellers who copped the biggest losses usually purchased their properties at pressure cooker auctions for well above reserve fearing they’d soon miss out on the chance to get into the market.

With skyrocketing interest rates making it costlier to keep their properties, many needed to sell but were unable to find buyers willing to splash out top dollar in the current falling market.

It comes as PropTrack data showed house prices fell by an average of more than $50,000 in 34 Sydney suburbs over the past year, including 16 suburbs where the falls were bigger than $150,000.

The pandemic housing boom has ended in many instances in buyer’s remorse. Picture: Sam Ruttyn

The suburbs included northern beaches enclaves Warrawee, Narrabeen, Fairlight and Palm Beach, along with East Lindfield and South Turramurra on the north shore, among others.

Apartment prices fell by more than $50,000 in 46 suburbs – including 22 suburbs where the average drop was greater than $100,000.

Some sellers in pricey coastal areas made even bigger losses, including the vendor of a property with duplex potential in Sutherland Shire suburb Caringbah South.

The owners had paid nearly $2.95m for the 790 sqm property on Crescent Rd last year and resold it in July for $2.24m – $710,000, or 24 per cent, less than they paid.

And in Manly, a single level house on Ashburner St that sold for $4.21m in December last year changed hands again in May, unchanged, for $3.6m – a loss of about $615,000.

The sellers of this Caringbah South home paid nearly $2.95m last year and resold it in July 2022 for $2.24m –$710,000 less than they paid.

There was a similar sale in nearby North Balgowlah, where a seller who paid $3.3m for a four-bedroom house on Eileen St last year resold for $2.85m, $450,000 less.

Losses of $195,000-$350,000 were reported for other properties in Wahroonga, Point Clare and Greenacre.

PropTrack director of economic research Cameron Kusher said many of the biggest losses on home sales were a “reflection of people overcapitalising and no longer being able to afford the properties”.

“People just stretched themselves too far in a lot of areas and, for some, their circumstances then changed,” he said, adding that many were paying the price for blindly charging into the market last year.

“There was a level of desperation,” he said. “It was the third strongest market for price growth in history. There was not a lot of stock, people were chasing the market.

11 Hughes Street, Point Clare: resold for a -$205,000 loss.

“People had seen prices increase 20 per cent. They may have thought, buy now and the value will be 20 per cent higher next year. Obviously it was not the case.”

Mr Kusher said “poor communication” from the Reserve Bank of Australia may have been a further factor in some buyers making poor decisions last year.

Reserve Bank governor Philip Lowe had indicated that interest rates would remain unchanged until 2024.

He has since been widely criticised for failing to emphasise that rates would rise from their historic lows if the economic landscape changed.

And the governor this week issued an apology to homeowners. “I’m certainly sorry if people listened to what we’d said and acted on what we’d said and now regret what they had done,” the governor said.

16 Mahratta Ave, Wahroonga, NSW 2076 sold in 2021 for $2,700,000 and resold in 2022 for $2,350,000 , $350,000 less. .

Mr Kusher said there would have been buyers who interpreted the messaging about low rates until 2024 as a “guarantee”, leading them to borrow more.

“There would have been buyers who normally wouldn’t have borrowed as much, but they took the full amount banks could lend them thinking rates would be on hold,” Mr Kusher said.

Economists are expecting a further rise in the cash rate to be announced at the RBA’s next board meeting on Tuesday, with 35 out of 40 property experts surveyed in a recent Finder.com.au poll predicting another 0.25 per cent increase.

Graham Cooke, head of consumer research at Finder, said an eighth consecutive rate hike could be the final nail in the coffin for many.

“It’s looking fairly certain that Australian households will be dealt another blow by the RBA,” he said.

RBA Governor Dr Philip Lowe won’t be on many homeowners Christmas list this year. Picture: NCA NewsWire / Gary Ramage

“For many it will be like finding a lump of coal in their Christmas stocking.”

Economist Eleanor Creagh said buyers’ borrowing capacity has dropped so much over the past year that few could pay the same prices as last year and further price falls in most areas were imminent.

She noted that real estate in Sydney’s most expensive regions had the biggest price drops, while real estate in more affordable city regions were recording minimal declines.

Ms Creagh said this pattern would likely continue over the coming months as buyers taking on smaller mortgages were less affected by recent rate rises.

“Decreased borrowing is weighing down the most on expensive areas,” she said.

“Demand has held up better for housing types that are comparatively more affordable.”

Originally published as Real estate Sydney: Suburbs where home prices are plummeting