Property values have fallen dramatically on the Sunshine Coast and beyond, seemingly ending a two-year boom.
The latest information from property experts CoreLogic shows that house prices in the area have fallen 4.5% since the market peak a few months ago, and fell 2.2% from July to August.
It is the third biggest drop in parts of Australia, behind Richmond-Tweed and Southern Highlands-Shoalhaven in New South Wales, and the second biggest drop in Queensland, behind Brisbane North.
Homes that were worth a median price of nearly $1.117 million in April lost significant value to sit at $1.066 million in August, about $50,000 less.
Unit prices in the region were down 5.5%. Units with a median value of $785,000 in May were worth around $742,000 in August.
The sudden price drop is in stark contrast to the phenomenal price increases of early 2020 through April/May this year.
Home values in the area rose 52.5% from the COVID low to the recent high in values, with a median gain of around $337,000.
But interest rate hikes, implemented in stages from May, appear to be having an impact as potential buyers show more restraint.
CoreLogic research director Tim Lawless expected prices to continue falling for some time.
“We are now in the downturn phase,” he said. News from the Sunny Coast.
“The market peaked from April to May and we’ve seen three to four months of declines now and it looks like it’s picking up momentum,” he said.
“It will probably continue to fall for more than a few months, but it really depends on the path of interest rates.
“We expect interest rates to probably not peak until the end of this year or near the end of next year, but that is very uncertain.
“When we start to see interest rates stabilizing, that’s likely to be the queue for house prices to stabilise.”
He said owners could still make incredible profits.
“The market has turned, but for most property owners, they will still find themselves in a pretty extraordinary capital position given this rise in value (over the past two years), unless they haven’t bought in the market recently.”
He said the recent sharp drop in prices was a relative reaction to the sharp rise in prices.
“Prices are falling so much on the Sunshine Coast due to the magnitude of the recovery,” he said.
“We probably saw the market overshoot the mark there.
“A growth rate of around 50% over the past two years has not been sustainable.
“We have also seen this in similar areas like Byron, the Southern Highlands and the Gold Coast. They have also seen dramatic increases in their values and are now falling at a similar rate. »
He said the Sunshine Coast has seen a bigger boom than most places because of its coastal charm.
“During the pandemic, we’ve seen a real shift and demand into lifestyle markets,” he said.
“The Sunny Coast ticks that box, so it was in the perfect area for demand.
“We have seen interstate migration soar in South East Queensland, driving demand.
“More people have been able to work remotely, so we have seen people moving there.
“At the start of the growth phase (2020/2021), there was a real accessibility advantage on the Sunshine Coast, especially for interstate migrants out of markets like Sydney and Melbourne, who could cash in from these (lucrative) markets ) and buy in the Sunny Coast.
“That advantage has been largely eroded now because we’ve seen property prices rise.”
Prices remain high for quality homes
Local McGrath real estate agent Matt Diesel said prices in the area had cooled.
Mr Diesel is the Sunshine Coast Zone Chairman of Queensland’s flagship body for the real estate industry, the Real Estate Institute of Queensland.
He said the market was stabilizing and that would create a “healthy” environment for buyers and sellers.
“We just got back to a normal market,” he said.
“It went from manic to manageable.”
Mr. Diesel said prices for average homes were falling more.
“The stock that is price correcting is the B and C grade stock,” he said.
“That stock is now sitting there and if it doesn’t have the perceived value, it will show up.
“Buyers take a little longer. They review the stock and understand what it is and the value in the area.
“People paid for just about everything and didn’t take the time to think about it.
“They were putting offers on the site without seeing them and forgoing cooling off periods and not doing their due diligence with these B and C grade stocks.”
But Mr Diesel said there was still strong competition for high-quality goods.
“The blue chip stuff, the A-grade stocks, always do well,” he said.
“It’s still selling and they’re getting record prices, as we’ve seen over the past two weeks. There has been phenomenal sales and competition for them.
“It just depends on where it is and what it is.”
He expected lower prices to take hold in the near future.
“We’re back to a nice, stable level and I think that’s going to balance out now for the next two years, until we get our next raise.”
“I think we’re pretty much at the bottom of where it’s going to correct itself.
“After a massive rise there would always have been a period of stabilization and we’re just going through that and now we’re going into a steady, normal market for a while.”
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Mr Diesel said some new estate agents were “freaking out” over falling prices.
“Some who haven’t experienced it (a downward trend) are panicking and the media is not doing any favours.
“But a lot of agents also understand where we are, going back to a normalized market.
“Interest rates are still incredibly low and if it weren’t for all the hype in the media, I think the pace (of the decline) would be slower.
“People aren’t willing to pay ridiculous prices for quality B and C stocks like they have, but there are still plenty of buyers, and buyers looking for good quality stocks , and they will pay for it.”
He also said the sharp price drops on the Sunshine Coast were a ripple effect of the dramatic price rise.
Home loans fall as prices fall
The value of home loans nationwide fell sharply in July as house prices fell in Australia.
The Australian Bureau of Statistics said new housing loan commitments in Australia in July fell 8.5% from the previous month.
Meanwhile, home values saw the biggest monthly decline in nearly four decades in August.
The national index fell 1.6% during the month.
The decline spread to all capitals except Darwin, with Sydney still leading the downward race – falling 2.3% in the month.
Brisbane’s slowdown is also accelerating, with values down 1.8% after falling 0.8% in July.
In August, regional home values fell 1.5%.
But house values remained well above pre-COVID levels despite the market downturn, with all regions and capitals except Melbourne still seeing house values at 15% or above levels recorded in March 2020.
-Additional reports by AAP.
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