Sydney’s property market has experienced a significant downturn, with home values falling by more than $100,000 in over 200 suburbs in the three months to July.
Exclusive figures from PropTrack show that median house values declined in 91% of Sydney suburbs with available data, while unit values fell in 69% of suburbs.
More Than $300,000 Wiped From Values in Some Suburbs
The largest falls were recorded in some of Sydney’s most expensive coastal and inner-city suburbs. Areas including Manly, Mosman, Fairlight and Curl Curl recorded some of the biggest declines, with average three-month value falls reaching hundreds of thousands of dollars.
More than 200 Sydney suburbs recorded a median property value decline of over $100,000, while nearly 400 suburbs experienced a fall of more than $50,000 in either house or unit values.
The sharpest declines were concentrated at the top end of the market, where high property values have amplified the impact of falling prices.
Multiple Factors Weighing on the Market
According to REA Group economist Anne Flaherty, several factors have combined to weaken buyer demand. These include proposed property tax reforms, higher interest rates and broader global economic uncertainty.
The changes have also contributed to increased uncertainty among investors and home buyers, with many potential purchasers choosing to delay their buying decisions.
Buyer’s agent Peter Kelaher said investor activity had significantly declined following the announcement of the proposed reforms. Even the new-build market, where some negative gearing benefits were retained, has reportedly seen weaker investor demand.
Buyers Are Sitting on the Sidelines
The combination of falling property values and economic uncertainty has led many buyers to take a wait-and-see approach.
Mortgage broker Julian Choo said many buyers were hesitant to purchase while concerned that property values could continue to decline. This has contributed to weaker demand and reduced confidence across the market.
For some homeowners, rising living costs and higher mortgage repayments are also making it more difficult to hold onto their properties.
Some First-Home Buyers Face Limited Flexibility
The downturn could be particularly challenging for recent first-home buyers who purchased with high loan-to-value ratios.
Buyers who accessed low-deposit schemes may have limited equity in their homes, making it more difficult to refinance and secure a lower interest rate. With many lenders requiring borrowers to have more than 20% equity to refinance, falling property values could limit options for some homeowners.
What Could Happen Next?
Experts suggest the current downturn could last longer than previous periods of falling prices due to the continued uncertainty surrounding interest rates, government policy and the broader economy.
Inner-city unit markets, which have historically attracted a high proportion of investors, could be particularly vulnerable if investor demand remains weak.
For buyers and sellers, the current market highlights the importance of carefully assessing property values, borrowing capacity and long-term financial commitments before making a decision.
With property values falling across hundreds of Sydney suburbs, the market is entering a period where understanding local conditions could be more important than ever.
