House prices on the coast plunge as much as $600,000
House prices in popular coastal towns such as Byron Bay have slumped by as much as $614,000, as higher interest rates make it tougher for sellers to hold on to their holiday homes and for hopeful buyers to qualify for a loan.
Home values in 27 coastal towns have plummeted by more than $200,000 from their pandemic highs two years ago, while 56 towns lost more than $100,000, analysis by CoreLogic shows.
House prices in Byron Bay have plunged by more than $600,000 since their peak two years ago according to CoreLogic. Danielle Smith
“Many of these areas recorded a spectacular run up in values during the worst of the pandemic, arguably overshooting the mark of what could be considered fair value,” said Tim Lawless, CoreLogic research director.
“It was almost inevitable that these markets would see a drop in values following, in some cases, more than a 50 per cent rise through the pandemic.
“For buyers who were priced out of these markets during the upswing, the fact that values are now well below their record highs does create an opportunity to try again, but under market conditions that are arguably more skewed towards the buyer than the seller – quite the turnaround from the worst of COVID when values homes were selling rapidly and prices were surging.”
Aspiring seachanger Anagondanahalli Chidananda from Sydney, is among those who are trying again after missing out during the pandemic.
“I’ve been looking to buy a coastal property for around three years now, but prices were rising so fast and became so unaffordable, so it’s good to see prices coming down a bit,” Mr Chidananda said.
Anagondanahalli Chidananda is hoping to snap up a bargain on the NSW coast. Oscar Colman
A tennis coach and IT professional who owns a house in Girraween in Western Sydney, Mr Chidananda hopes to buy a beachside home within commuting distance to Sydney, such as the Central Coast, Wollongong or Newcastle.
”I’m not looking for anything extravagant, I just want access to the beach, read my books and pursue my hobbies such as tennis,” he said. “Having lived in Western Sydney for nearly two decades, a sea change has been my dream for a very long time. Now with lower prices, I may finally get my beachside home.”
McGrath Byron Bay principal agent Will Phillips said buyers like Mr Chidananda have started returning in droves to the area this year.
“We’ve seen a noticeable surge in demand across Byron Bay from buyers inquiring about open inspections since January 1. So much so that I decided to come back a week early from my holidays,” he said.
“The market has been pretty weak in the past year and a half because the rapid interest rate increases have spooked many buyers.
“We also saw some vendors selling up because they found it tough to afford the increased mortgage repayments, so they’re putting their property on the market before they got into financial distress, so listings increased.”
Coastal towns with the largest drop in home values since their peaks
| Change from market peak ($) | ||
|---|---|---|
Byron Bay home values plunged by 24.1 per cent since peaking two years ago, slashing $614,364 off the median to $1.94 million.
Home values in nearby coastal towns also fell sharply from their peaks. Ocean Shores slumped by 25.2 per cent, cutting $405,381 from the median to $1.2 million, while Suffolk Park lost 23.7 per cent, reducing the median by $581,371 to $1.88 million.
Lennox Head tumbled by 23.2 per cent, shaving $406,567 off the median to $1.35 million, while Brunswick Heads sank by 22.3 per cent, taking $320,615 off the median to $1.11 million.
At their peaks, Byron Bay prices soared by 76.4 per cent and Suffolk Park jumped by 84.7 per cent. Values surged by 72.7 per cent in Ocean Shores and rose by 64.7 per cent in Brunswick Heads.
House prices in the Mornington Peninsula also posted large declines since the recent boom.
‘Sharp price adjustments’
Portsea plummeted by 10.2 per cent, or down by $343,993. Sorrento tumbled by 12.6 per cent or a $295,187 drop, while Finders and St Andrews Beach decreased by $232,000 each.
Despite the sharp declines, Portsea is still the most expensive coastal town in the country at $3.03 million median dwelling value, followed by Flinders at $2.33 million, and Sorrento at $2.05 million.
At their pandemic peaks, Portsea prices rose by 65.3 per cent, Sorrento increased by 69.8 per cent and Flinders lifted by 63.7 per cent.
Rob Curtin, managing director of Sotheby’s International Realty in Mornington Peninsula, said vendors had to slash their asking prices significantly to attract buyers.
“We’re seeing sharp price adjustments continue to flow through because a lot of properties are sitting on the market for a long time. Unless vendors adjust their prices, they’re not going to get any buyers,” he said.
Mr Curtain said listings had increased significantly compared to the previous year as the higher interest rates and cost of living had taken their toll on some vendors who decided to offload their property before they were forced to sell.
“There will be a lot more stock coming into the market than normal in the coming weeks so cashed-up buyers should be able to negotiate a good deal,” he said.
Meanwhile, home values in Lorne on the Great Ocean Road, Sunrise Beach on the Sunshine Coast, North Avoca and Wamberal on the Central Coast have lost between $238,000 and $300,000 since their peaks.
By contrast, the prices in the more affordable coastal towns in Queensland’s Wide Bay region such as Moore Park Beach, Elliott Heads and Burnett Heads have surged to new peaks. Since the onset of COVID-19 to December last year, home values jumped by 82.5 per cent, 81.9 per cent and 78.4 per cent respectively.
