Every month we have access to monthly property statistics at a capital city level. But how are things tracking at a local level? Based in the Inner West of Sydney, we transact on property regularly and observe the local market for our clients every day. We have reviewed the data over the last 12 months (a challenging 12 months across the country for property), and compared this data to the selected suburbs across the Inner West listed below.
Looking back at the March 2020 landscape, we saw property prices initially decline across the country at the shock of the global pandemic. It did not take long however, for the market to regain ground and subsequently move through a record-breaking upswing in property prices. From October 2020 through until February 2022, the Sydney market experienced an increase of 27.9% in property prices. Property prices then started to decline from February 2022 and Sydney has experienced a decline of approximately -13.8%. The decline began to moderate in October 2022 however, and month on month, the decline continued to decelerate until March 2023 when we have started to see a small uplift in values.
At a capital city level, this information is relatively easy to find, but what is happening at a more localised level? Did property prices experience the same cycle? And did they experience the change in the cycle at the same pace?
Let’s consider the data at a suburb level using CoreLogic’s Mapping the Market Tool. Here is a sample of 5 suburbs across the Inner West. The table shows the changes in prices over the past 12 months compared to the changes in property prices over the past 3 months.
|12 months property price change
|3 months property price change
What does the data tell us?
Clearly there has been a noticeable drop in house prices in the previous 12 months. However, the pace of price declines is slowing. And in fact, the most recent data for Sydney as a whole, shows property prices actually lifted by 1% in the past 4 weeks.
Turning to the apartment market, units sustained a proportionately smaller decline in property prices compared to houses in the last 12 months. We can see from our sample, that while unit values fell in the 5 Inner West suburbs, they did not fall at the same pace as house price declines.
The resilience of the unit market is likely due to the affordability constraints and a preference away from houses. During the boom of 2021, house values increased at a higher rate than units driven by the demand for more space during the lockdowns. The rising cost of living, difficulty in obtaining finance and a shift towards unit living, has contributed to the strength of the unit market.
What is the outlook for property?
We could be experiencing the early shoots of positivity in the property market. While it is early days and there are still challenges ahead, we will never know when the bottom of the market hits until it has already passed us. And to reference the classic Buffet quote, “be fearful when others are greedy and greedy when others are fearful.”
If property prices have already declined by 15-20%, (the amounts economists and property experts were predicting) and you’re still waiting for the bottom to hit, you might be too late. If you have a long-term horizon and plan to hold the property for years to come, is it worth the gamble of hoping the property market will fall further? Or can you capitalise off the already discounted property prices and ride the next upswing?
If you are contemplating your next property purchase, call us today: Nick Viner 0405 134 645.