We all know Sydney property values have declined over the last 12 months, but new data from Core Logic shows a dramatic drop in the number of Sydney suburbs that have a median price of at least $1 million.
The most notable decline in median prices have been the unit market, showing a decline of 31%. The housing market has faired a little better, with only a decrease of 8.9% over the last 12 months – showing buyers do value land over airspace.
NSW median house prices
As at January 2019, there were 366 suburbs in NSW that had a median house value of at least $1 million. Compare that figure to 12 months ago, and the count hit a massive 402 suburbs. Sydney accounted for 93.7% of all million-dollar suburbs in NSW.
Rewind 10 years ago, and there were only 78 suburbs in NSW with a median house price of a least $1 million in 2009.
Whilst Sydney has seen a correction in property values from the peak in early 2018, the reduction of million-dollar suburbs for houses (-8.9%) isn’t as shocking as the median price for units. This is partly due to the current over supply of units in Sydney, where the demand just isn’t meeting the supply.
“Some property valuations arranged by the bank are coming in lower than the purchase price, so it’s essential that buyers negotiate and don’t exchange on a contract until they have a home loan approval in place, with a confirmed bank valuation.”
NSW median unit prices
Sydney has seen the highest levels of unit construction over the last few years, and we are now seeing an oversupply of completed units on the Sydney property market. A perfect storm has hit unit developers with the combination of the property market correction, tightening credit, restrictions on foreign investment, and uncertainty around the government. Value is based on supply and demand, and now there are too many units available for sale, and buyers are struggling to get the finance to purchase these units. Some lenders have also implemented postcode restrictions on certain suburbs where the bank feels the value doesn’t represent the sale price.
As at January 2018, there were 67 suburbs with a median unit value of at least $1 million. Now only 46 Sydney suburbs have a median unit value of at least $1 million – a dramatic drop of 31%!
Crazy Sydney property prices receive a reality check
Many will rejoice in the fact that there are now far fewer suburbs with a price tag of over $1 million and the reality check is definitely a boost for first home buyers. Sydney property prices were absolutely out of control, so the correction is very much welcome.
So, is it easier to get into the Sydney property market now?
How to get a Sydney home loan
Property price reductions is definitely helpful to gain entry into the property market. However, lending conditions and credit policy is proving difficult for buyers to secure finance. Borrowing capacity calculations have changed significantly over the last 18 months, reducing the amount people can borrow. Cost of living has also increased, making it harder for buyers to save money for a deposit. And, to top it all off, property values in Sydney have declined, yet seller expectations are still high. Some property valuations arranged by the bank are coming in lower than the purchase price, so it’s essential that buyers negotiate and don’t exchange on a contract until they have a home loan approval in place, with a confirmed bank valuation.
The best approach is to work with a Sydney mortgage broker, like Mint Equity, who can guide you through the home loan application process, and work with you to prepare your finances so you are in a position to get a home loan with minimal stress. Lending conditions are changing on a daily basis, so rather than going direct to one bank, a Sydney mortgage broker will assess the most suitable home loan from a panel of over 40 lenders.