Luxury suburbs near Australia’s big cities are suffering the biggest drop in house prices and more interest rate hikes are expected.
Sydney and Melbourne have already suffered the first quarterly fall in property prices since mid-to-late 2020, before the Reserve Bank of Australia reduced its cash rate to an all-time low of 0.1 per cent.
In other markets, where general prices continue to rise, some seven-figure luxury suburbs are now declining, and townhouses in Hobart, Perth and Brisbane are falling in value.
In the three months to April, Sydney’s average home price fell 0.3% to $ 1.417 billion.
But in more luxurious zip codes, the quarterly decline was even more pronounced.
Luxury suburbs close to the city are suffering the biggest drop in house prices with the most expected interest rate hikes (pictured, Oxford Street in Darlinghurst, inland east of Sydney)
CoreLogic head of research Eliza Owen said richer suburbs that benefited from the boom were more likely to suffer a bigger downturn.
“These are also areas that have experienced some of the most extraordinary gains over the cycle and have historically been a benchmark for other parts of the market,” he said.
In Beaconsfield, just 5 miles south of Sydney city center, average home prices have fallen 8.5% in three months, or $ 168,263, to $ 1.808 billion.
Until October, it had an annual price growth of 33.7%, but has slowed to 2%.
Near Darlinghurst, the average house price plummeted 8.3%, or $ 206,944, to $ 2.282 billion.
Suburban annual growth has slowed from 26.9% in October to just 2% in April.
The Surry Hills neighbor saw a half-point home price drop by 7.8%, or $ 180,196 in three months, to $ 2.131 billion.
In October, the suburb grew by 28.9% year-on-year, but has since slowed to 2.9%.
Darlinghurst saw the average house price plummet 8.3 percent, or $ 206,944, to $ 2.282 billion. Suburban annual growth has slowed from 26.9% in October to just 2% in April (pictured, Oxford Street during Sydney Mardi Gras)
Sydney, Melbourne, with the worst fall since 2020
Sydney, down 0.1% in April, down 0.3% in the quarter to $ 1,416,960
MELBOURNE: Down 0.2 percent in April, 0.5 percent in the quarter to $ 1,000,926
BRISBANE: 1.7% more in April, 5.9% more during the quarter to $ 880,332
ADELAIDE: 1.9% more in April, 5.6% more during the quarter to $ 676,546
PERTH: 1.2% more in April, 2.5% more in the quarter to $ 578,751
HOBART: Down 0.4% in April, up 1.4% in the quarter to $ 793,723
DARWIN: up 1.3% in April, up 3.2% in the quarter to $ 576,149
CANBERRA: 1.3% more in April, 2.5% more during the quarter to $ 1,070,220
Source: CoreLogic average home prices in April 2022
Melbourne also suffered a quarterly fall with a 0.5% drop in the average house price to $ 1.001 billion.
But in the much more luxurious suburbs of Park Orchards, 23 miles northeast of the city, prices for the three months to April fell 7.1 percent to $ 155,061 to $ 2,014 million. .
Balaclava, 7 km south-southeast of the city, prices have fallen 5.1% or $ 84,174 to $ 1,563 million.
Port Melbourne’s average home price fell 5 percent, or $ 94,544, to $ 1.778 billion.
Hobart is also slowing at an average price of just 1.4 percent during the quarter to $ 793,723.
But at Mount Stuart, 2.5 miles northwest of downtown, home prices have fallen 4.8 percent or $ 48,720 to $ 962,142 over three months.
West Hobart’s average price fell 4.5 percent or $ 49,911, to $ 1.059 billion.
In Brisbane, the global market continues to grow with intermediate prices rising 5.9 percent during the quarter to $ 880,332.
But in Nundah, 12 km north of the city, the average house price has fallen by 2.4%, or $ 29,129, to $ 1.168 billion.
In Perth, average prices rose 2.5 percent to $ 578,7541 during the quarter.
But at the end of Peppermint Grove on the Swan River, home to billionaires Andrew Forrest, Gina Rinehart and Kerry Stokes, average home prices have fallen 1.5 percent, or $ 41,184, to $ 2.688 million of dollars.
The fall continued in April before the Reserve Bank raised interest rates by a quarter of a percentage point to 0.35%, marking the first rate hike since November 2010.
The average house price in Port Melbourne fell 5 per cent, or $ 94,544, to $ 1.778 billion (pictured is a view from the Melbourne Star Observation Wheel, nearby )
Westpac expects the RBA to raise interest rates sevenfold next year to 2.25 percent, which would be the highest cash rate in eight years.
Richer zip codes, where borrowers typically make more money, don’t suffer the same type of mortgage stress as interest rates go up.
But Ms. Owen said luxury area shoppers also borrowed a lot more, making smart zip codes more susceptible to a larger drop.
“Higher-income households tend to hold more debt from housing to income, so do real estate investors,” he said.
“That’s why the high end of the market may often be more sensitive to changes in interest rates or credit conditions, but this can also affect some other popular investment markets such as urban areas.”
In the three months to April, Sydney’s average home price fell 0.3% to $ 1.417 billion. But in more luxurious zip codes, the quarterly decline was even more pronounced (the photo shows the view of Sydney Harbor from Dawes Point)