Sydney house prices have had their steepest annual fall on record, declining 10.9 per cent last year as rising interest rates took a toll on buyer demand and spending power.
Sydney’s median house price fell more than $170,000 to $1,413,658 last year, the latest Domain House Price Report, released on Wednesday, shows.
However, the pace of declines slowed in the December quarter when the median fell 2.1 per cent — three times slower than the previous three months.
House prices are now 11.3 per below their early 2022 peak, but are still 24.2 per cent higher than they were when the market troughed in mid-2020.
Unit prices fell, but at a slower pace, dropping 1.2 per cent to a median of $748,422. Prices fell 6.5 per cent over the year, and are now lower than March 2020.
Domain’s chief of research and economics Dr Nicola Powell said the housing market posted its steepest annual decline on Domain records, which date back to 1993.
While the pace of declines had eased recently, further falls were expected, Powell said.
“Prices are still pulling back … we’ve just moved away from the extreme rate of decline,” Powell said.
“In the September quarter [there] was a shock reaction from the market. We really saw the impact of aggressive rate hikes … reduced borrowing capacity, and [buyers] factoring in future rate hikes.”
Buyers have since adjusted to rising rates, while there had also been a pullback in homes for sale, which helped to moderate price falls, Powell said.
ANZ senior economist Felicity Emmett expected the shift to higher rates for many homeowners would lead to a sharp pullback in consumer spending, rather than a lift in distressed listings, as the high employment rate should limit forced sales.
She has forecast Sydney prices to keep falling and decline 18 per cent from peak to trough, based on expectations the cash rate would peak at 3.85 per cent and hold steady until rate cuts start in late 2024.
