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Suburbs where property prices are falling: can you afford a mortgage there?

Alex Ritchie avatar
Alex Ritchie
- 4 min read
Suburbs where property prices are falling: can you afford a mortgage there?

There are several suburbs across each Australian capital city already recording property value falls. So, is now the time to consider purchasing property or is it still out of reach?

CoreLogic research has shown that property values have fallen by almost $200,000 in some suburbs in the three months to May 2022. And the figures indicate that more expensive homes tend to fall in value before low-middle income areas as interest rates rise.

The Reserve Bank of Australia (RBA) has now hiked the cash rate three times since May 2022, with many reports indicating this will help pour cold water on the property market.

CoreLogic research shows that Greater Melbourne recorded a quarterly decline overall of 0.5%, with a median value now sitting at $1,000,926. Greater Sydney also recorded a quarterly fall of 0.3%, with the median value recorded at $1,416,960.

So, with prices falling across a multitude of suburbs, Australian homebuyers may be wondering if these homes are now within arm’s reach? Unfortunately, as these are some of the more affluent suburbs, mortgage repayments in these areas may still be out of the price range for the average Australian and many first home buyers.

RateCity crunched the numbers on the median values in suburbs where prices had fallen, against the RBA’s current average mortgage rate for new customers of 2.61% for May 2022, to show you how much mortgage repayments would be in these areas. The figures indicate that even after quarterly price falls, repaying a mortgage here would still be quite costly. 

Quarterly change to prices – repayments on new median values

Rank/suburbMedianQuarterly change %Monthly Mortgage Repayments
Greater Sydney
1 Beaconsfield$1,808,431-8.5%$6,571
2 Darlinghurst$2,282,494-8.3%$8,293
3 Surry Hills$2,131,457-7.8%$7,744
Greater Melbourne
1 Park Orchards$2,014,243-7.1%$7,319
2 Balaclava$1,562,276-5.1%$5,676
3 Port Melbourne$1,777,799-5.0%$6,459
Greater Brisbane
1 Nundah$1,167,648-2.4%$4,243
2 Banyo$907,911-1.6%$3,299
3 Sherwood$1,405,089-0.8%$5,105
Greater Perth
1 Bateman$893,671-1.6%$3,247
2 Peppermint Grove$2,668,295-1.5%$9,695
3 Como$1,001,768-1.4%$3,640

Source: CoreLogic.com.au, RateCity.com.au.

Note: Monthly mortgage repayments based on a 25-year home loan for a customer with an 80% LVR on a mortgage based on the current median property prices in these suburbs. Figures based on interest rate of 2.61%.

More property value falls expected

With interest rates in Australia on the rise, the amount of money you could borrow for a home loan will have potentially fallen in the last three months of RBA-led cash rate hikes.

In fact, following the first cash rate hike in over a decade in May, RateCity research found that a single person earning $100,000 a year could now borrow $20,000 less than prior to the hike.

While first home buyers wait for property prices to fall in suburbs within their price range, home buyers may want to focus on bolstering their deposit as much as possible through genuine savings or considering a guarantor.

CoreLogic research director Tim Lawless said: “We know the market was already slowing gradually, but the downturn seems to have sharpened over the last two months,”

“We’re fairly early in the down phase. Considering interest rates have a lot further to go, you have to expect the upper end of the marketplace will continue on this trajectory.”

“I think it highlights the impact of some of the recent changes in the market. The fact that the cash rate has risen through the month is probably one of the factors that contributed to the sharper slowdown through the month, but also the impact that it had on consumer sentiment,” said Mr. Lawless.

In the meantime, those hoping to get a foot on the property ladder could consider looking towards bridesmaid’s suburbs. These are areas in proximity of your ideal suburb that may be more affordable. This affordability could come from having less green space or public transport access, but the idea is that you could travel easily to your preferred suburb when needs be.

And with home loan interest rates expected to continue to rise until Christmas, prioritising a low-rate loan to begin with could be one way to ensure your mortgage repayments are protected from a higher-rate environment.

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Product database updated 16 Apr, 2024

This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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