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The Sydney electorates facing the biggest fall in house prices

Prices in Prime Minister Scott Morrison’s own seat of Cook have fallen by 13 per cent, with the suburbs of Miranda, Caringbah and Gymea recording the fastest drops since February.

Labor-held seats in the city’s west have taken a hit, with Paramatta, Blaxland, Barton and Watson all seeing price falls of between 11 and 12 per cent.

Lindsay, held by outgoing Labor MP Emma Husar on a razor thin margin of 1.1 per cent, has experienced a 10.5 per cent price fall.

“The number of out-of-towners buying investment properties has slowed right down,” said Ms Husar. “You used to see sold signs being slapped up straight away, now real estate agents are downsizing or closing.”

Peter Lewis from Essential Media said housing affordability was being mentioned in his organisation’s polling, with many swinging voters still concerned about their ability to rent or buy a home.

He said it was unclear whether a correction in the housing market, after a huge run-up in prices, would lead to widespread angst because it only affected those trying to sell.

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“It’s an issue of swings and roundabouts – if the Liberal attack is negative gearing it will solidify the haves but it further gives the have nots a reason to look somewhere else,” he said.

Prices in Wentworth, won by independent Kerryn Phelps in September after Malcolm Turnbull resigned from Parliament, have also fallen sharply, led by double-digit drops in the harbour-side suburbs of Rose Bay, Vaucluse and Watson’s Bay.

In the north, Liberal MP John Alexander said falls in his seat of Bennelong were inevitable after witnessing prices in suburbs in his electorate grow by 80 per cent over six years.

“When it goes up too rapidly it will come down to rapidly. A crash is no good for anyone. You have to move very carefully, people could lose their  homes” he said.

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But he said the cooling market also presented a chance for younger Australians. “My children and their partners see an opportunity, housing is coming back into play,” he said. “Not so long ago they were excluded from the market.”

JWS Research Pollster John Scales said the falls in house prices could play differently in various seats.

He said in Liberal-held seats, there may be a focus on the impact of Labor’s policy to clamp down on negative gearing and how this could affect future changes in house prices.

But in Labor-held seats, falling prices and the policy of a “living wage” may feed into an attitude that housing is becoming more affordable.

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AMP Capital chief economist Shane Oliver said household debt was at the top of the OECD average, or eight or nine times household income in some parts of Sydney and Melbourne.

“That’s why I think this correction may take a bit longer to work through than we’ve had in the past,” he said.

UNSW economist Richard Holden said the faster than expected slump and its flow onto household spending would be a top priority for policymakers.

Reserve Bank governor Philip Lowe has said that the housing market will not “derail” the Australian economy.

Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.

Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.

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