Domain House Price Report for the March quarter includes Kiama figures

Even popular areas such as Kiama appear to be feeling the effects of a softening property market.

Domain recently released the Domain House Price Report for the March quarter.

According to the report, in the Kiama LGA, the median house price dropped from $930,000 in March 2018 to $832,500 a year later.

This is a decrease of 10.5 per cent.

Shellharbour LGA houses had a median price of $640,000 at March 2018; this figure was $620,000 as of March 2019.

In Wollongong, the median house price dropped by 6.9 per cent from March 2018 to 12 months later; $751,600 to $700,000. The median price for Wollongong units fell by 5.2 per cent, from $580,000 to $550,000.

Domain Group senior research analyst Dr Nicola Powell said all markets are being impacted currently, although regional areas did seem to be holding up better than capital cities.

SOLD: This home at 27 Tingira Crescent, Kiama sold for $3.35 million last July. According to a Domain report, in the Kiama LGA, the median house price dropped from $930,000 in March 2018 to $832,500 a year later. Picture: Supplied

SOLD: This home at 27 Tingira Crescent, Kiama sold for $3.35 million last July. According to a Domain report, in the Kiama LGA, the median house price dropped from $930,000 in March 2018 to $832,500 a year later. Picture: Supplied

Sydney house prices have fallen 14.3 per cent from the mid-2017 peak.

"If you look at the fall in Shellharbour and even Wollongong, that fall has occurred to a much lesser extent than what's being recorded in Sydney," she said.

"Kiama was hit quite hard; being down ten per cent is a pretty significant number.

"But Kiama is the most expensive (LGA) within the Illawarra region, and at more than $900,000 (previously) had a high median price.

"I think perhaps we're seeing those within that price bracket being impacted by the banks trying to reduce their exposure to those borrowers who have a high debt-to-income ratio.

"That means their loan sizes are reduced, people can't borrow as much... That has really targeted those areas that have a high median price, which is why Sydney and Melbourne were impacted first."

Dr Powell said there may be other factors affecting the Kiama LGA market.

"We have had a lot of people in Sydney who have seen extraordinary growth in their homes," she said.

"This probably means they have experienced that wealth effect and maybe purchased secondary holiday homes.

"As the wealth effect deteriorates, what it means is people reconsider their options; that second home, that holiday home becomes a distant dream.

"That impacts activity levels, and the coastal areas are impacted. I think the first coastal areas to be impacted will be the ones closest to Sydney. That appears to be happening; if you shift further down the coast to the Eurobodalla, we're still seeing price growth."

However, Dr Powell said the Illawarra region's five-year growth was significant.

"This means home owners overall who have owned their homes longer than a year will have experienced significant equity growth," she said.

"It impacts the people who have bought within the past year, who are maybe now seeing a little bit of negative equity in their home, and the value of their home has declined slightly."

Dr Powell also said that as conditions have slowed, prospective buyers now have "more of the upper hand".

"Those buyers who are able to get a home loan, they can transact in the market knowing they have more time to make their property decisions, and are probably able to negotiate a little more than they were once able to," she said.

"(The softening market) also might mean that for some buyers, it might bring other suburbs into their price point, and open up some more options for them."

This story Here's how much Kiama house prices dropped in a year first appeared on South Coast Register.