Sydney real estate rollercoaster: prices tumble in some areas, skyrocket in others

A bump in home sales and buyer hesitancy ahead of an expected rate cut next year have helped temper the Sydney housing market.

PropTrack’s latest Home Price Index showed Sydney home prices flat lined across much of the greater city area over spring, while falling across the inner west, inner south and CBD.

The median price of dwellings across the city as a whole, based on sales of units, townhouses and houses, inched up 0.19 per cent over October – well below the pace of price rises earlier this year.

A typical Sydney house now costs $1.45m, while unit prices average $818,000, according to the PropTrack figures released Friday.

A report from AFR released today said house prices were now falling across two out of every five Sydney suburbs, which was a five time increase from 12 months ago and the highest level in 20 months.

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The number of Sydney suburbs where house prices fell over the past three months to October jumped to 225, up from just 46 last year, the report said.

It comes as a report from valuations firm Herron Todd White revealed Sydney was likely reaching a peak in prices – suggesting there may not be much more room for further value rises, unless rates are cut.

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Buyers have more choice than earlier this year. Listing volumes remain well up on previous years, with September recording the biggest surge in advertised sales since 2015.

Property experts told News Corp that Sydney remained a buyer’s market and conditions were more conducive to minor price falls.

This has proved true for the inner west, where home prices dropped by an average of 1.18 per cent over the past quarter, and the CBD and inner south, where prices dropped by an average 0.38 per cent.

There was a different climate in the eastern suburbs where values rose a staggering 2.36 per cent over the quarter – the highest growth in the city.

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Auction clearance rates have been subdued over spring. Picture: Richard Walker

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This would have added more than $50,000 to prices in what is already by far the most expensive housing market in the country.

PropTrack economist Eleanor Creagh said eastern suburbs price rises were likely fuelled by a surge in upgrader activity from buyers who had plenty of equity in their old homes.

This meant they were less affected by higher interest rates and could bid up prices at auctions.

Ms Creagh added that it was clear that the Sydney market as a whole had lost a lot of momentum from earlier this year but the minor price rises over October remained surprising.

“Growth in Sydney is defying affordability constraints and the uncertainty around the timing of rate cuts. There is also more stock but prices are still rising even with that extra buyer choice,” she said.

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Sales results have been more “property specific” than usual, agents claim. Picture: Sam Ruttyn

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Sydney’s housing market is expected to bounce back if interest rates are cut, but the market could go the other direction if the RBA keeps rates on hold for longer than expected.

A poll by mortgage group Finder.com.au revealed one in seven homeowners would have to sell their home by February or apply for hardship unless interest rates began to fall.

Such a significant bump in sales would likely drive another downturn in prices.

Source: PropTrack

Additional reporting by News Corp staff