Worst performing Sydney and Melbourne housing markets tipped to suffer 16 per cent price plunges

Australia’s worst performing housing markets are expected to plummet by another 16 per cent in 2019 alone – wiping more than $300,000 off home values.

Moody’s Analytics, an independent arm of the global credit ratings agency, is particularly worried about the Ryde area, in Sydney’s north, and Melbourne’s upmarket inner-east.

House prices in Australia’s two biggest cities were already in the midst of the worst downturn on record and more double-digit plunges were expected from the inner-city to the outer suburbs.

Australia’s worst performing housing markets are expected to plummet by another 16 per cent in 2019 alone. Ryde in Sydney’s north (Gladesville pictured) was tipped to suffer a 15.8 per cent plunge 

Upmarket suburbs in Melbourne’s inner-east, including Kew and Hawthorn, were expected to suffer a house price plunge of 16.3 per cent in 2019. 

A plunge of that nature would wipe $318,000 from Kew’s median house price of $1.95million. 

Sydney’s northern suburbs are also in bad shape, with the Ryde area and nearby Epping forecast to suffer a 15.8 per cent plunge this calendar year.

With Ryde’s median prices standing at $1.5million, this would represent a drop of $237,000.  

Houses in neighbouring and more upmarket Gladesville would plunge by $331,000, from an existing median price of $1.75million.

Moody’s described the downturn in Sydney and Melbourne median real estate values as more of a correction than a crash, following five years of strong growth.

A plunge of that nature would see median house prices in Gladesville, that aren't on the Parramatta River, plunge by $330,750

A plunge of that nature would see median house prices in Gladesville, that aren’t on the Parramatta River, plunge by $330,750

It analysed CoreLogic real estate data and forecast the ‘majority of the decline and slowdown’ in Melbourne would be concentrated in areas closer to the city.

For Sydney, Moody’s blamed the house price drops on home values rising too quickly after the global financial crisis, pointing out prices in 2019 were still 60 per cent above where they were in 2012. 

‘The strong gains in values of prior years were driven by the upbeat state economy, which encouraged relatively higher population growth and employment opportunities compared with other cities, subsequently lifting demand for housing,’ it said. 

‘However, housing values have risen at a faster rate than what fundamentals – income, population and interest rates – suggest, and thus they are overvalued. 

Upmarket suburbs in Melbourne's inner-east, including Kew (pictured) and Hawthorn, were expected to suffer a house price plunge of 16.3 per cent in 2019

Upmarket suburbs in Melbourne’s inner-east, including Kew (pictured) and Hawthorn, were expected to suffer a house price plunge of 16.3 per cent in 2019

‘This is partly driving the sharp corrections across greater Sydney throughout the forecast period.’

Since peaking in July 2017, Sydney’s median house price has plummeted by 16 per cent, or $169,140, falling from $1,049,740 to $880,594, CoreLogic data showed.

Australian house woes

Sydney, down 11.8 per cent, to $880,594

Melbourne, down 12.4 per cent, to $718,443

Brisbane, down 1.3 per cent to $538,544

Adelaide, up 0.7 per cent to $460,673

Perth, down 7.6 per cent to $467,783

Hobart, up 5.7 per cent to $493,237

Darwin, down 3.2 per cent to $478,191

Canberra, up 3.9 per cent to $669,911

Source: CoreLogic  Home Value Index for March 2019 showing annual movements in median prices for detached houses 

Melbourne’s median house price has dived by 13.8 per cent, or $114,005, since peaking in November 2017, falling from $832,448 to $718,443.

Moody’s expected greater Melbourne’s median house price to plunge by 11.4 per cent in 2019, compared with 9.3 per cent for greater Sydney.

It forecast Perth’s median house price plunging by 7.6 per cent in 2019 as Brisbane’s equivalent value dropped by 0.6 per cent.

Better news was forecast in Adelaide, where prices were tipped to rise by one per cent as Hobart house prices climbed by four per cent.

Melbourne was forecast to see five of its suburban markets suffer double-digit falls in 2019, including the inner-south (down 14.2 per cent), the outer east (down 11.9 per cent), the inner city (down 10.1 per cent) and the Mornington Peninsula (down 10.1 per cent). 

Sydney was predicted to also suffer sharp falls in the inner south-west (down 14.4 per cent), the eastern suburbs (down 11.6 per cent), the inner south (down 11.5 per cent) and the inner-west (down 10.2 per cent).

Moody’s expected Melbourne to continue struggling in 2020 as most Sydney markets recovered.

Melbourne was forecast to see five of its suburban markets suffer double-digit falls in 2019 (pictured is a Moody's Analytics graphic)

Melbourne was forecast to see five of its suburban markets suffer double-digit falls in 2019 (pictured is a Moody’s Analytics graphic)

Moody's expected Sydney's median house price to plunge by 9.3 per cent in 2019, with some areas even more affected

Moody’s expected Sydney’s median house price to plunge by 9.3 per cent in 2019, with some areas even more affected

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