Sydney house prices falling in 'premium locations', but rising in historically affordable outer suburbs
Sydney's property prices have fallen in "premium locations", but risen in traditionally affordable areas. (ABC News: John Gunn)
In short:
The downturn of Sydney's house and unit prices are "less likely" to impact first home buyers, a residential economist says.
Data released by Domain shows the city recorded the lowest drop in the country, but mainly in "premium locations".
A real estate agent in a traditionally affordable area of Sydney's west says buyer confidence is at "an all-time low".
First home buyers are "less likely to be affected" by Sydney's housing price and unit downturn as historically affordable areas have increased, a property expert says.
Figures released by real estate company Domain showed a turning point for the city's house prices, which saw the largest drop in the country of 3.3 per cent on the last quarter.
Domain's chief residential economist, Nicola Powell, said it was the first quarterly fall in about 3.5 years for house prices, and the first quarterly fall for units.
"The fall for house prices in particular was quite sharp. It means that about $60,000 was shaved from the median house price in three months,"Dr Powell said.
However, she said the downturn had impacted "premium locations" in Sydney's north and east, not necessarily making it easier for first home buyers.
"Those areas that are outer suburbs that are much more affordable, these are areas that are actually still rising in price," she said.
"At the outer south-west as an example, house prices there are up almost 13 per cent over the past year."
Dr Powell says the fall of Sydney's house prices has been "sharp", but has not reached the outer areas.
'It ripples out'
The quarterly data shows usually affordable suburbs Penrith and Fairfield have seen a $12,000 increase in unit prices compared to last quarter.
But, Dr Powell does expect the shift could eventually make it to those traditionally more affordable areas, including Western Sydney.
"What you tend to find when Sydney moves into a downturn, what moves first and what sees property prices fall first are the premium locations," she said.
"Then what happens over time is it ripples out. It ripples to those middle suburbs and often you tend to find those very outer suburbs either don't see a fall, or if they do see a fall, it's much more marginal."
Andrew Partners Real Estate director Gary Attard, who has worked in and around Fairfield for almost three decades, said uncertainty was changing how buyers approached the market.
"Buyer confidence is at an all-time low,"he said.
"We had a combination of the budget announcement, the tax reforms, and obviously with the cost of living at an all-time high, we are seeing the market affected in a negative way."
Mr Attard says buyer confidence in Fairfield is at "an all-time low". (ABC News: Abbey Haberecht)
Mr Attard said there was still demand for units due to affordability, but houses and properties with land were "unfortunately still out of reach for a lot of first home buyers".
"We're seeing first home buyers hesitant to buy, they're waiting for the bottom-end of the market," he said.
"Young first home buyers have got their savings to invest in a property, and that deposit that they initially outlay with falling prices, are scared to lose that."
NSW Housing Minister Rose Jackson said the change in the market was in its relatively early stages.
"I don't want to read too much into it. I still think housing is really expensive in Sydney, so the average house price is still up close to $1.7 million,"she said.
"When you talk, as I do to people who are on the social housing waiting list, who are looking for affordable housing, they still see house prices as a huge issue."
Investors 'sitting on their hands'
Dr Powell said a convergence of factors, including three rate hikes this year, had caused the slowdown in one of Australia's most exposed markets.
"We've also got ... weak consumer confidence, and when you do see consumer confidence low, it does slow down transactions across the housing market," she said.
"It [Sydney] has a higher proportion of investor activity compared to other state and territories and I think what we've got at the moment is the sentiment has changed dramatically."
Mr Attard said the investment market in Fairfield had come to a "complete stop".
"Investment is not on the radar. Property investors are sitting on their hands,"he said.
"They're scared to make a move at the moment because of so much uncertainty."
Dr Powell said the cash rate had hit its peak, but warned any rate reductions were a "far distance away".
"It's important to remember that this is the normal dynamics of a property price cycle," she said.
"We have gone through a period of strong growth and you then tend to find a period of weaker growth."