NSW Sydney prices falling fast

I'm not convinced the house prices are dropping at all. I just think that the price gauging the vendors where asking for are just being slightly reduced and hence it "Looks" like price drops but they were just taking advantage of the situation and milking all the buyers hard.

If anyone just saw the clearance rates published just then every single state has shot back up from last week and the initial shock of the interest rate rise.

If anyone was watching the channel 7 news just then they showed several auctions and asked the buyers and the buyers were saying "I thought the interest rate rise would make prices cheaper and that is definitely not happening". They also were discussing that auctions have shot back up since the rate announcement which is shown in todays clearance rates.

They also were discussing that rents have soared 20%+ in many places and that is attracting HUGE number of investors back in the game. They dont care about 0.25 rise in rates or even a 1% raise - its still cheap as chips and basically free money still.

Anyway lets see. I reckon the initial shock has worn off on ppl. Share markets are tanking, crypto is basically gone now. Real estate even if the RBA raise rates to 2% still looks attractive IMHO.

People arent stupid every dick and harry knew 0.1% was emergency rates. Everyone knows rates will eventually go back to around 2% sooner or later once the economy settles.

 

People are being a little dramatic. An interest rate rise on a 500k loan is less than $20 per week. And most people are living well atm. Stop buying the meal plan boxes and buy straight from the supermarket and there's your saving. Or one less restaurant meal per month. Even a few rate rises wouldn't cause hardship for most, except those who maxed out their borrowing limit on the latest Ranger and a boat and are already close to spending all that they earn.

 

Sydney auctions: Home sellers under pressure to cut prices amid brutal run of results - realestate.com.au

Really dropping? Or not?

 

Hi @Redom,

Interesting you're seeing prices come back already. I agree with the previous comments that mentioned not all markets are moving together. I track the Concord market closely and there was a record house price achieved 6 weeks ago and record semi price achieved 3 weeks ago, so doesn't seem to be happening here yet. There does seem to be less buyers competing on each property compared to 12 months ago though, but with the media pumping out doomsday headlines re interest rates and election fluff, I'm not surprised and expect sentiment across the board will be a bit flat for a month or 2.

In terms of what happens over the next 12-18 months though, here are my thoughts on newer product in infill locations...

We already have a supply issue, and I think this will get even worse due to:
- Immigration opening up (more demand)
- Construction costs increasing, so some development projects are getting put on hold/delayed (further pressure on supply)
- Construction timeframes blowing out (One of the developers yesterday mentioned he usually builds townhouse complexes in 6 months, they currently have one that has been going for 18 months and still can't complete it) (again, further pressure on supply)
- With construction costs increasing, developers will hold firm on asking prices, or may just hold their stock and rent it out given rentals are strong (again, limits supply of product for sale)

As a result of the above exacerbating supply/demand issues, I see this "downturn" being short-lived. Even with a few cash rate increases, money will still be relatively cheap, and people still need somewhere to live. We may see people downgrade their requirements if their borrowing capacity drops (ie instead of buying a house they look at a duplex, instead of duplex they look at townhouse etc).

I think interest rate rises might have a harder & longer lasting effect on new land estates in Western Sydney where a lot of first home owners bought/built H&L packages recently with higher LVR's and are more sensitive to interest rate increases, and the extra $10 per tank of petrol, extra $20 for a trolley of groceries etc. hits their bottom line.

Would be interested to hear your thoughts on the above, as well as anyone else.

 

I’m active in Sydney’s East. Asking prices haven’t changed. But end prices have come down the past month or so, especially for average stock. There is less competition and no real FOMO. At least in the $1.5M - $3M apartment market. But good units are still selling at a premium. Some apartments are probably worth 10% less now than in February. But when you to take the 50% increase since 2019 into consideration it’s not really that relevant.

 

The prices in some areas have already have come off 10%. I reckon another 10-15% is possible. It will take time for vendors to adjust expectations.

I have not seen a 50% increase since 2019.... more like 30%.

 

Where?

Not interested to see things like Vendor reduced $3.4M to $3M because majority of those ppl were asking unrealistic prices anyway. In fact I'd say 90%+ of all those sales where just price gauging the buyers.

I can also ask $200k for my Harley when the markets are selling at $150k. If I drop my price to $175k does that mean the market just dropped $25k? Hell no - it just means I was asking whatever I wanted in the first place.

 

Mate you need to watch. By suburb

The fact a lot are selling before auction is an indication.

When people like Chris Joye are saying a 15-25,% retrace in prices I would be listening.

I personally think more like 10-20% of the median. This is normal. So on a median of 1.62 m. You could see the median retrace to between 1.3 to 1.45m. Essentially late 2020 prices...this is assuming mortgage rate of 4-4.5%. let's see....

 

I’m in the eastern suburbs only so I’m not sure what’s going on west of Potts Point. I bought my place last year for $1.6M. Sold it last month for $2.4M. While anectodal it’s the same everywhere I look. Some properties have even doubled. (Good apartment buildings in Elizabeth Bay, Darling Point and Double Bay). Other crappier areas haven’t done so well. Bondi Junction has had maybe a 20% increase the past few years. So the 50% is an estimation of the average for my area.

 

The easiest way to check is to calculate square meter price for similar apartments in the same buildings. My building went up to $22K at the highest in March but it’s now back to $19K

 

Today's corelogic index value 214.04, same level at 26 November 2021,

 

Mate your spot on. Some areas in the East have easily past 50-70% growth. I live in the area and follow it closely.

 

More evidence of price dropping.

First one I posted on the Q1 / Q2 thread.

Here's 2 examples for you from lower northern beaches (1 example I posted in another thread).e

Sold 10 Ashburner Street, Manly NSW 2095 on 18 Dec 2021 - 2017444281 | Domain $4.215M
Sold 10 Ashburner Street, Manly NSW 2095 on 11 May 2022 - 2017721744 | Domain $3.6M

2 suburbs / 5 min drive away:

5/37 Lodge Street, Balgowlah NSW 2093 | Domain
- on the market since late last year, vendor wanted $1.2M, yes, probably too high
- Feb - vendor turned down an offer of $1.1M, IMO fair price for comparable sales at the time
- has been sitting for a couple of months w $1M price guide

 

Yes def some drops. Especially on the average end of quality.
Saw a place yesterday in Double Bay. They knocked back an offer of $2.1M last month after guiding $2.2M. Agent said they’d probably take $1.9M now. I’m planning on offering even lower as strata fees are on the high side.

 

Very possible stuff like this (Balgowlah unit) will be under 900k.

For example...I know someone who sold for 1.1m in Dee Why. Now lots of units under 950k....and some even better.

Interesting times... human always underestimate how quickly things can change. Particularly if they have had a very large benefit....it will be very obvious in the next 6-12 months.

I truly believe we may see a long flattening of the market...at least in Sydney...Brisbane as things have gone up too much.

 

No idea about units. I dont care about them nor do I pay attention to them.

Anyway lets see. Honestly looking at the pickup in activity since the rate rise announcement that I saw last weekend and yes I just recently bought in Brisbane. There was an initial lul or pause that I saw as well immediately after the rate announcement - but then a week after everyone came to their senses. Honestly last week in Brisbane was pretty packed and my old man said Sydney turnout wasnt bad either. He went to a Auction in North Rocks sold for $1.3M slightly over asking.

Come one people. 0.25% rise!! LOL If that is make and break for your real estate you should never be buying in the first place.

 

I’m seeing good stock holding it’s own. Average stock I’ve seen a couple of Auctions cancelled/ rescheduled and asking prices dropped.

I’m going to make a comparison to the UK market at the moment. Cost of living in the UK is out of control. They’re paying £1 to the $1 on just about anything. Coffee, fuel, chicken, energy - you name it.

Property prices are rising there and desperately bad properties in bad areas are selling within days.

A house a suburb over from one of mine has not been touched since 1960. Totally original. Board went up on Thursday. Online advert was 2 days from going live. They had 60 phone enquiries and 3 sold unseen offers between 10 and 15% over the vendor’s expectations within 24 hours of the sign going up. The area is decent but definitely not the best road.

I draw the comparison because the UK are running away from Australia in terms of the rising cost of living and experiencing regular interest rate rises. There’s still money coming from somewhere and there’s record low stock levels.

Rents have risen broadly 10% since 2019 in my area. I could ask 20% more tomorrow and the tenants would have no option but to pay it as they cannot get anything better or similar (but they’ve been fantastic tenants so far and I want to keep them).

 

Agree that .25% makes no meaningful difference to anyones ability to pay their mortgage. Maybe at 1.5% some will start having problems. But it’s not about that. Prices are all about sentiment and where we expect prices to be in a year or two. Right now the sentiment is down from last year. In Sydney by a lot. FOMO ran prices through the roof. We’re far from despair and fear but there is definitely no FOMO right now in Sydney’s East.

 

like to like comparison, same street, same suburb

7 months apart, two neighbouring properties on Bowral St North Rocks sold and $ 250K difference.

2 Bowral St North Rocks - $ 1.625m – 5/2/2/721sqm - May 2022 – sold prior to the auction, took offer 2 days before the auction,

4 Bowral St North Rocks - $ 1.875m –-4/2/1/695sqm - Oct 2021 – Sold at auction during FOMO stage,

both property share boundary fence, both got street parking issue, both in school zone facing Christ the King school.

Better property sold 13% (250,000) cheaper, 2 Bowral St is little superior property (corner lot, dual street frontage, larger lot, extra bedroom, extra lounge room, extra garage space,