The latest property price data from Domain.com.au as the residential property website operated by Domain Holdings Australia Ltd (ASX: DHG) shows that predictions for house price falls of 15%-20% have already come true across some Sydney suburbs.
Sydney's house prices enjoyed a five-year bull market from 2012-2017 that saw prices rise around 70% in many suburbs, but according to Domain.com.au house and apartment prices have plunged in many suburbs over the past year.
For example in the harbour-side suburb of Rose Bay, house prices are reportedly down 20.4% over the past year, with the inner city Sydney suburbs of Redfern, Kingsford, Russel Lea, Glebe and Petersham posting house price falls of 14.5%, 9.5%, 17.4%, 14.7% and 13.4%, respectively, over the past year.
Other popular areas in Sydney's lower north shore and the city's south have also seen big house price falls.
For example, Lane Cove North house prices are reportedly down 15.5% over the year, while Sans Souci in the south has seen house prices fall 12.9% according to Domain.
Apartment or unit prices in some of these areas have fared just as badly with unit prices in Newtown down 17.1%.
Unit prices in other suburbs close to the city or beaches such as Bellevue Hill, Double Bay, Balmain and Erskineville have tumbled 15.2%, 15%, 12.9% and 11.8% respectively. While many areas in North Sydney like Milsons Point and Fairlight have seen double-digit falls in apartment or house prices.
According to Domain, Sydney's median house price fell $76,616 or around $1,400 per week over the year ending September 2018 in a result that could flow through to the Australian share market.
House prices in Melbourne, Perth and Darwin have also dropped over the past year in a warning sign for bank investors.
Bank shares, for example, have fallen over the past year as residential property lending is their core business. As asset values fall the chances of bad debts rise, while the risk remains that over-leveraged property investors may sell all together if the property price falls accelerate.
Over the past year shares in Australia & New Zealand Banking Group (ASX: ANZ) are down 17%, with Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) shares down 21% and 22% respectively.
