Sydney home values drop in 63 suburbs

Home values are rising across most of Sydney, but they’ve fallen by up to $110k annually in a range of suburbs still grappling with the fallout of a Covid-era trend.

Home values have been rising in most of NSW over the past year, but there remain pockets where the fallout from trends seen during the pandemic have pushed down prices.

Median values fell in 224 NSW markets, including 63 unit and house markets in Sydney, and many more in the city’s surrounds, exclusive valuations analysis revealed.

Price falls were the most significant in Sydney’s outer suburbs, Central Coast and commuter regions within orbit of the NSW capital such as the Southern Highlands and south coast.

Median prices in these suburbs dropped by up to $110,000 over the past year, according to the valuations data from researcher PropTrack.

Experts explained that many of the weakest markets were areas that were popular during the early Covid pandemic.

Home values have not been rising in every market and there were some suburbs where they actually fell.

Lockdowns and the prevalence of work from arrangements had driven an exodus to outer areas and regional markets at the time – and many of these areas were the biggest beneficiaries of the shift.

The flow of new buyers has since subsided as workers return to CBD locations, while the explosion of prices in 2020 and 2021 means affordability issues remains a significant barrier for new buyers.

Suburb Data analyst Jeremy Sheppard, commenting on historic patterns in real estate markets, said this type of price correction was part of a common boom to bust cycle.

He noted that a massive growth spurt in prices over a sustained period, in cases where the increases were well above surrounding areas, could make those markets more volatile.

“Buyers start to go for the bridesmaid suburbs if they feel can get better value for money there,” he said.

“They won’t keep paying higher prices in one area if they can get a similar thing for cheaper somewhere else.”

Higher unit supply in high-density pockets was another frequent factor that pushed down prices as it removed the scarcity factor that often pressured home buyers to pay more, Mr Sheppard said.

PropTrack revealed home values dropped in 37 suburbs in the Capital Region over the past year, 36 suburbs in the Southern Highlands and Shoalhaven area.

Roughly one in three of the 63 suburbs across Greater Sydney where values fell were located in The Central Coast. Values also fell in 11 suburbs in the outer Hills District and Hawkesbury.

The area with the biggest value falls was Hills District suburb Norwest, where unit vales dropped by an average of $110,000, or 11 per cent, over the year to March.

A few kilometres to the south, in Winston Hills, unit values dropped by 9.6 per cent, pulling the median vale down $66,200 from $689,400 to $623,200.

Avalon Beach in the far north of the northern beaches region – another boom market during Covid – had average unit value falls of 6.6 per cent, which pulled the median down by about $77,000.

Falling unit markets in The Central Coast – arguably the strongest NSW market during the pandemic – were Avoca Beach, Wyong, Umina Beach, Terrigal, Ettalong Beach, Berkley Vale and Gosford.

Demand in outer suburbs is not as high as it was during the Covid pandemic.

PropTrack economist Angus Moore, commenting on the weakness in The Central Coast in general, said there were multiple forces pushing down prices in some suburbs.

He pointed to higher mortgage rates encouraging many owners of holiday homes to sell, which increased stock levels, while an easing of the sea-change and tree-change trend during Covid hurt the region.

PropTrack economist Anne Flaherty said home values in most suburbs were growing again after dipping during the interest rate hikes of 2022 and 2023. She added that more home value rises were on the cards in most suburbs this year due to lower stock levels and higher demand. An expected rate cut later this year may also channel more buyers back into the market, Ms Flaherty said.

Originally published as Sydney home values drop in 63 suburbs