After recent growth, the market is now focused on how much housing values could drop before levelling off.
In Sydney, CoreLogic’s Pain and Gain report shows that the number of properties sold at a loss increased 6.4% in the June quarter, while median property prices declined by 1.8%.
High-density apartment buildings in city fringes are leading the downturn, with the majority of the owners forced to sell at a loss. In some areas, the number of properties selling at a loss is as high as one-in-five.
What’s the reason?
There is a loss of trust in high-rise apartment blocks as a result of incidents in which apartments have been found defective and a desire for the maximum amount of space due to the pandemic work-from-home boom.
Additionally, an increase in new apartment supply has left some sellers no choice but to sell their apartments for less than they paid.
Losing suburbs in Sydney
A nominal gain was realized in 93.6% of property sales in Sydney during the June quarter, a decrease from 95.1% the previous quarter.
The report indicates that profitability declined across both house and unit resales across Sydney, though the decline was more pronounced in the unit market.
There was a 40 basis point decrease in profit-making resales in the quarter across houses compared to 98.5% and a 240 basis point reduction across units compared to 89.4%.
As an example, Rosebery, Zetland, Waterloo, Ryde and Parramatta have high concentrations of loss-making sales tied to the unit market, according to the report.
Sydney suburbs where owners are selling at a loss
(Gross loss-making sales, June quarter 2022)
LGAs | % of sales selling at a loss | Median loss |
Ryde | 21.2% | -$35,000 |
Strathfield | 19.6% | -$40,000 |
Parramatta | 19.1% | -$35,140 |
Burwood | 18.8% | -$32,000 |
Botany Bay | 13.3% | -$56,000 |
Source: CoreLogic Pain & Gain report, June 2022 quarter