The 'Icarus Effect': Three Sydney areas where apartment prices have fallen

Sydney’s median apartment price jumped 6.2 per cent in the six months to December, but in some areas of the city the cost of buying an apartment actually fell.

In the past six months the median price for an apartment dropped 3.3 per cent in Sydney’s south-west, 1.3 per cent in the west and 0.4 per cent in Canterbury Bankstown, Domain Group data shows.

Over the entire year Canterbury-Bankstown recorded a drop of 1 per cent. The median apartment price in the area is now $520,000.

Domain Group chief economist Andrew Wilson said it’s a case of the “Icarus Effect” in these areas where prices have gone up so much the locals can’t afford to buy.

“They reached for the sun and now their wings are melting,” Dr Wilson said.

“Strong prices growth pushed prices out of reach and now these areas are in pause mode as they’ve reached an affordability barrier.”

This has left some property owners having to discount bullish asking prices to achieve a sale.

One-bedroom 10/32-34 Campsie Street, Campsie last sold in January 2015 for $307,500. Earlier this month, the apartment was put back on the market for $579,000.

Not long into the campaign the price was reduced – marketed at “$520,000 to $550,000”.

This reduction has worked, with the property currently receiving offers and the vendor in negotiations with a possible buyer, LJ Hooker Campsie sales agent Francois Vassiliades said.

But it is a sign of a market that has changed significantly since the height of the boom – in the past five years, prices have increased 61.5 per cent in Canterbury Bankstown. In 2011, the median was about $325,000.

“It has slowed down a lot on the unit side of things, but it’s still quite strong for detached homes,” Mr Vassiliades said.

“Pricing is quite high [for apartments] and the new supply is making buyers hesitant.”​

Starr Partners chief executive Doug Driscoll said the majority of properties in Canterbury Bankstown were houses, which he expected would continue to grow in value.

“There are still about 20 people turning up to most open homes and at least half a dozen potential buyers for every property,” he said.

“There isn’t enough property to go round and we have a real shortage of detached homes in particular.”

But he said developers had been “ultra-ambitious” through the boom and if they continued to build “would get to a point where supply will outweigh demand”.

National Property Buyer state manager for NSW Simone Luxford said it could be the case that higher levels of supply, along with less bang for your buck in the market, was weighing on the desire of home buyers.

“The inner areas are still in high competition, so it has become a very mixed market,” Ms Luxford said.

The northern beaches median apartment price increased 6.9 per cent in the six months to December, the lower north jumped 6.7 per cent, while the city and east increased 6.3 per cent.