It’s official: Inner Sydney house prices are starting to crack

The Fairfax Media press is reporting that Sydney’s “inner city and eastern suburbs” house prices dropped 6 per cent over the quarter ending September 2017 in a sign that the inflows of overseas capital supporting the city’s inner-ring market may be starting to dry up.

The apartment market in Sydney’s lower north shore dropped 6.7 per cent in value over the quarter, although these steep quarterly price falls should be put in the context of a five-year bull market the harbour city’s inner ring has lapped up.

Another quarter of falls in the mid-single digits will mean inner the average value of an inner Sydney house has dropped more than $200,000 over the six month period ending calendar year 2017. While average inner-city apartment prices could have tumbled around $90,000 in just the second half of 2017.

Overall, Sydney home values fell nearly 2 per cent for the quarter when including the city’s outer suburbs.

The price falls come as the property market is supposed to hit its straps for the key spring selling season as affordability in Sydney remains an issue, despite borrowing rates sitting at record lows.

According to Domain house prices in Melbourne rose 1.3 per cent over the quarter to an average selling price of $880,902, while the average house price across the entire nation reportedly fell 0.3 per cent.

If confidence in the resilience of Sydney’s house prices starts to collapse prices could fall further, although property in the city is likely to remain a sound long-term bet due to the strong underlying demand.

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