Sydney home prices have crashed back to earth after years of runaway growth as a nascent downturn rips through coastal areas and some of the city’s inner- and middle-ring suburbs.
Analysis of exclusive PropTrack figures revealed median home values in many Sydney suburbs are now more than 10 per cent below their 2025 levels, with most falls concentrated about 15km from the CBD.
These drops shaved more than $150,000 off the median value of homes in some areas, the data showed.
The bulk of these falls occurred in the three months after this year’s first interest rate hike in February.
Another acceleration point in the pace of falls occurred after leaks from Treasury in April revealed negative gearing and capital gains tax would be reformed in the May federal budget.
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A unit in this building on Culworth Ave in Killara recently sold for $980,000, which was below the $989,000 price paid by the vendors.
Suburbs in the Parramatta areas such as Rydalmere and Dundas recorded some of the sharpest annual drops, with unit values declining by an average of nearly 20 per cent.
Similar falls were recorded for units in upper north shore suburbs Turramurra and Killara.
Other notable falls were recorded in Parramatta, Crows Nest, Mosman, Hunters Hill, Bellevue Hill, Surry Hills, Bronte, Bexley, Rozelle and Milsons Point, among other areas.
Falls across Greater Sydney as a whole were smaller: the value of the typical city dwelling has dropped by about $15,000 since February and remains 2 per cent higher than at this time last year.
Auctioneer Clarence White, the director of auction group Menck White, attributed the recent falls to a steep decline in buyer demand, especially for higher priced homes.
“People’s borrowing power has taken a huge hit because of interest rate hikes,” he said. “Someone who could have bought for $2m last year often can’t anymore.”
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A unit in this building on Morton St, Parramatta recently sold for $515,000, $5000 less than the sellers paid for it.
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Many buyers were responding by sitting on their hands and those that remained actively bidding were “extremely price sensitive”, fearing what they paid now may be higher than prices later this year.
“Interest rate hikes have pushed more people into the (lower) end of the market. Once you go below $1.5m, there is still a lot more competition,” Mr White said.
SuburbData head of research Jeremy Sheppard said many buyers were likely holding off their purchases until they got more certainty about what interest rate they would have to pay.
“There is still an expectation there could be more increases,” he said. “Typically, when there is uncertainty the most natural response is for people to wait.”
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Just 42 per cent of the homes that went to auction in the first week of June sold. Picture: Sam Ruttyn
Kent Lardner, the lead analyst at research group FoundIt, said the kind of falls being seen across more affluent Sydney suburbs were typical of the start of a downturn.
This pattern, seen in previous market downturns, typically saw home prices fall first in higher-priced suburbs before rippling into other parts of the market.
“The only market still growing is the bottom 25 per cent (for pricing). More buyers are being pushed into this market because of rising interest rates,” Mr Lardner said.
Recent tax reforms, including the replacement of a previous capital gains tax discount with an indexation system and negative gearing being restricted to new-builds, were adding extra uncertainty for buyers, Mr Lardner said.
Ray White chief economist Nerida Conisbee said the current downturn may soon become more widespread and not be restricted to pricier inner- and middle-ring suburbs.
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A unit in this Allesgrove Cres building in North Ryde sold in May for $748,300, which was below the $899,000 it traded for in 2015.
“As investors pull back, pressure is likely to build in cheaper, more investor-exposed markets, where year-on-year falls could ultimately be larger,” Ms Conisbee said.
War in the Middle East was likely a contributing factor to recent falls because it pushed consumer sentiment to its lowest level ever recorded, Ms Conisbee said.
“A small change in interest rates has a much larger dollar impact in Sydney than it does in cheaper markets, making affordability constraints bite quickly.
“But confidence is just as important. Sydney had already been weaker than many other markets, suggesting buyers were more cautious even at the end of last year.
“Once borrowing conditions tightened and consumer sentiment deteriorated, that caution became more pronounced, making Sydney one of the first markets to weaken.”
SUBURBS WHERE PRICES ARE NOW BELOW 2025 LEVELS
| Suburb | Median Sale | % Annual price drop | Drop in dollar terms |
| Dundas units | $685,500 | -20.8 | $180,030 |
| Rydalmere units | $730,000 | -18.4 | $164,608 |
| Killara units | $1,077,500 | -16.8 | $217,572 |
| Bexley units | $802,000 | -15.6 | $148,237 |
| Rozelle units | $1,300,000 | -15.3 | $234,829 |
| Mosman units | $1,332,500 | -15.1 | $236,994 |
| Turramurra units | $865,000 | -13.4 | $133,845 |
| McMahons Point units | $1,151,000 | -13.1 | $173,511 |
| Crows Nest houses | $2,777,000 | -12 | $378,682 |
| Hunters Hill units | $1,000,000 | -11.1 | $124,859 |
| Bellevue Hill units | $1,550,000 | -10.9 | $189,618 |
| Parramatta houses | $1,500,000 | -10.3 | $172,241 |
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