Five reasons why prices are falling in some suburbs
Nerida Conisbee Realestate.com.au
As property prices continue to accelerate across most of the country, it's a good time to look at the suburbs that are still recording price declines year on year.
There is no telling exactly what will happen with property prices in these suburbs over the next 12 months, but there are some key factors that could see prices continue to spiral downwards.
When looking at the suburbs where prices have declined over the past 12 months, there are five key factors to consider.
1. Falling unit prices
Unit price declines feature strongly nationally and also comprise six of the 10 suburbs seeing the biggest price declines. This is being driven by low levels of investor activity over the past year, which is starting to turn around, as well as poor performance of rental markets.
2. Weak rental markets
Many of the suburbs on the list are weak rental markets. This is particularly the case for those areas that are reliant on younger renters and those more exposed to hospitality, education and tourism, as well as areas where there are typically lots of students, both international and local. This includes unit markets of AuburnRedfernCarltonParramatta
3. Reliance on tourism
While regional Australia is the place to be right now, Cairns is yet to receive an uplift with prices still falling overall for the city, and Cairns Northunits being the weakest performer at a suburb level over the past 12 months. Cairns’ reliance on tourism is a big factor in its relatively poor performance
4. Lockdown hangover
Premium suburbs are overall doing very well, however Melbourne’s prolonged lockdown appears to have delayed Melbourne’s luxury recovery. Median prices for houses and units have declined in Toorak over the past 12 months with units hit particularly hard.
5. Localised factors
Four suburbs make less sense than others. These are Fremantle and Dalyellup in the rapidly recovering West Australian market. Burpengary East and in Queensland, which are both new development areas, also saw price declines. It is possible that more localised factors are at play in these locations.
Will these suburbs recover in 2021?
It is likely property prices will rebound in most of these suburbs in 2021, as employment levels return to their pre-COVID status and international borders begin to open up.
However, for those who prefer to buy at the bottom of the market, these suburbs may be worth a look.
