House price growth in some of the country’s most expensive markets such as Woollahra in Sydney and Stonnington in Melbourne is rapidly losing steam just as overall auction volumes are expected to be the highest ever recorded by CoreLogic.
Sydney’s top 25 per cent of the market by value grew 0.7 percentage points slower than the affordable segment, while in Melbourne the top end fell behind by 0.1 percentage points.
The shift in the market was largely fuelled by worsening affordability and exacerbated by upper-end volatility, CoreLogic Australia head of research Eliza Owen said.
House prices in the Woollahra local government area had risen by just 1.7 per cent, a 5.5 percentage point drop compared with the previous quarter. The area includes Sydney’s most prestigious suburbs of Bellevue Hill, Darling Point, Double Bay, Edgecliff and Woollahra.
The growth rate had shrunk by 4.6 percentage points to 3.9 per cent in Sydney’s northern beaches and slowed by 4.1 percentage points to 2.6 per cent in Randwick.
Similarly, the pace of house price growth in Melbourne’s Maroondah area had dropped by 5.2 percentage points to 1.8 per cent, while Stonnington declined by 4.8 percentage points to 0.6 per cent.
“The higher-end markets are losing momentum most quickly because higher-end markets are inherently more volatile, so they will typically have more dramatic upswings and downswings,” Ms Owen said.
“The current slowdown in growth rates could be tied to people simply being priced out, and looking to the next-most affordable markets, which is where we are actually starting to see a lift in growth rates across some lower segments of the market, including many unit markets.”
Melbourne units posted a 3.3 per cent growth – a sharp 4.3 percentage point turnaround from the previous three months when values fell by 1 per cent.
In Sydney, unit prices in Lane Cove rose by 4.3 per cent, which is 2.8 percentage points higher than the previous three months, while growth accelerated by 2.7 percentage points to 3.3 per cent in Botany Bay.
House prices in Sydney’s outer ring area of Hawkesbury climbed by 1.5 percentage points in three months to 6.4 per cent, and it rose by 1.1 percentage points to 2.7 per cent in Melbourne’s outer southwestern area of Wyndham.
Ms Owen said the faster growth in the lower end of the market may not be enough to offset the broader downturn in the Sydney and Melbourne markets.
Across Australia, Sydney and Melbourne are seeing the fastest slowdowns in growth with just 0.9 per cent and 0.6 per cent monthly growth respectively.
Of the 69 markets analysed across Sydney, 51 had recorded a drop in the quarterly growth rate between August and November. In Melbourne, 46 of 65 markets have seen a decline in the quarterly growth rate.
”Most indicators currently point to a slowdown in demand: clearance rates across Sydney and Melbourne are falling and Westpac-MI consumer sentiment releases have shown a gradual decline in the ‘time to buy a dwelling index’,” Ms Owen said.
“The ABS housing finance data shows growth in housing finance has passed its peak, and recent changes to the lending environment around increased serviceability assessment may slow some momentum in the investor segment.”
The build-up in supply has also started impacting demand. New listings volumes have jumped substantially across Sydney and Melbourne in recent weeks, leading to greater bargaining power for buyers.
This week alone, auction volumes are set to hit 5039, the highest ever recorded by CoreLogic.
Sydney, Melbourne, Canberra, Adelaide, Brisbane and the combined capitals are all expected to record the busiest auction week since CoreLogic records commenced in 2008.
Looking ahead, Ms Owen said it was possible for demand to return early next year.
“Turnover has been relatively low for a long time, so there was a lot of pent-up buyer activity in the lead-up to the current upswing,” she said.
“Government incentives, such as further stamp duty concessions or a refresh of the first home loan deposit scheme, might see a further boost to demand for housing in 2022.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/premium-suburb-prices-hit-as-auction-record-looms-20211209-p59g40