Sydney home values have recorded their biggest annual drop since 1990, with prices falling by 7.4 per cent over the past year, new figures show.

The nosedive puts Sydney on track to eclipse a 28-year record, with the last fall of that magnitude occurring in February, 1990, when prices had plummeted by 7.9 per cent annually.

Melbourne followed Sydney’s drop with an annual decline of 4.7 per cent over the 12 months to October 31, according to property data firm CoreLogic’s latest hedonic home value index.

Home prices also fell in Perth and Darwin—cities that have been experiencing ongoing downturns since mid-2014—with values falling 3.3 per cent and 2.9 per cent respectively.

While home values rose in the remaining cities on an annual basis, the pace of growth has eased.

“The latest results take the annual decline across the national index to 3.5 percent, signalling the weakest macro-housing market conditions since February 2012,” CoreLogic head of research Tim Lawless said.

According to CoreLogic, the downturn has been “relatively mild to date” with a 3.5 per cent fall in aggregated national dwelling values over the past year coming on the back of a 34 per cent rise in national dwelling values over the growth cycle.

Buyers ‘more empowered’ as downturn deepens

Prospective buyers are finding themselves in a stronger bargaining position, with the number of homes advertised for sale 10.5 per cent higher compared to this same time last year, and the total number of listings almost 20 per cent higher across Sydney and Melbourne.

“With total listing numbers likely to push higher over the final quarter of the year, buyers are becoming more empowered and will increasingly find themselves in a stronger position when it comes to negotiating on price,” CoreLogic said.

“With credit availability remaining tight and rising inventory levels, we are expecting there will be further downwards pressure on housing values as we move through spring and into summer and the New Year.”

The news follows last week’s report by Deloitte Access Economics which found that housing prices in Sydney and Melbourne are “falling by over $1000 a week”.

“Our house prices here in Australia had streaked past anything sensible by way of valuation,” Deloitte partner Chris Richardson told the ABC.

“Now, finally gravity has caught up with that stupidity and prices are falling.”

The downturn is now widely expected to continue into 2021, with AMP economist Shane Oliver predicting a peak-to-trough price plunge of around 20 per cent in the nation’s two major cities.

Sydney and Melbourne have come off historic price booms, with home values skyrocketing 64.4 per cent in Sydney over the five years to January 2018, according to CoreLogic data, and 56.4 per cent in Melbourne.