AS interest rates rise, the inner west is leading the downturn in Sydney real estate prices, with houses bearing the brunt over units, the latest CoreLogic data reveals.
In the statistical region of Leichhardt, which includes the inner west's prestige markets of the Balmain peninsula and Annandale, prices have dropped 6.3 per cent in the June quarter and 11.1 per cent since their November 2021 peak, landing at a median price across units and houses of just under $1.88 million.
The area's performance puts it in last place on CoreLogic's NSW SA3 (statistical area level 3) table. Second-last is the area that includes St Peters, Marrickville, Petersham, Sydenham and Tempe, where prices across units and houses have fallen 8.1 per cent since their peak and 5.3 per cent in the last quarter. The median price is now just under $1.53 million.
CoreLogic's Head of Research Tim Lawless said that affordability issues could account for the inner west decline. "Counter-intuitively, it looks like the unit market is holding up better than houses," Mr Lawless said. "As affordability constraints become more challenging through the cycle, there has been a deflection of demand toward the more affordable end of the marketplace, which would include the medium- to high-density sector."
He said In the Leichhardt region, housing values were up 32 per cent through the COVID cycle, but since peaking in November last year - which was a little earlier than the Sydney market more broadly - house values were down by 12.8 per cent, while units had lost only 4 per cent, "although they didn't show as much of a run-up".
"Maybe another reason for the inner west being a little softer, just comes back to the fact it has generally seen a longer, stronger long-term growth cycle as well."
Inner west buyer's agent Penny Vandenhurk said buyer demand had "massively" dropped off this year. "It is definitely a completely different market to what we saw in 2021," Ms Vandenhurk said. "At the moment the average auction has three active bidders; last year there would be six to eight.
"Part of it is that people think the market is going to fall further and are holding off thinking they will buy in the second half of the year. Then there is the element of interest rate rises, and people re-evalutating if they want to take a new mortgage at this point in time, or potentially not being able to borrow as much as they thought they could."
The SA3 region that includes Haberfield, Dulwich Hill, Summer Hill and Ashfield has begun to register falls in just the past three months, dropping 4.5 per cent in the June quarter to a median of $885,000 across units and houses.
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