Sydney home prices fall by up to $40k in some areas

Aidan Devine

Updated 1 May 2026, 1:01am

First published 1 May 2026, 1:00am

Sydney home prices have begun to fall as interest rate hikes, global economic uncertainty and question marks around potential property tax changes weigh on buyer confidence.

Figures from PropTrack’s latest Home Price Index released Thursday revealed Sydney home prices dropped an average of 0.5 per cent over April and are now 0.7 per cent below their late February peak.

The April drop equated to about $6,200 in lost value on the typical Sydney dwelling – the highest average price fall among capital cities over the period.

Price falls were even greater in higher priced markets like the eastern suburbs, where prices are now about $40,000 lower than in February.

Prices fell across multiple Sydney regions.

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REA Group economist Eleanor Creagh said the market was “rebalancing”.

“Rate-sensitive inner-city markets are leading the shift, particularly in Sydney and Melbourne, where price declines have emerged after back-to-back interest rate rises,” she said.

Greater Sydney prices remain 3.8 per cent higher than they were at this time last year due to a stronger market over much of 2025, but experts warn price falls could continue over the coming months.

More expected hikes in interest rates were pinned as the most decisive factor in the weaker market.

Historically, higher levels of mortgage debt have meant Sydney, and to a lesser extent Melbourne, home purchasers have tended to be more sensitive to rate changes than those in other cities.

REA Group economist Eleanor Creagh said the market was rebalancing. Picture: John Gass

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PropTrack showed this pattern has been repeating: Melbourne prices fell by 0.3 per cent last month, while prices in Brisbane, Adelaide and Perth continued to inch up last month with minor gains.

PropTrack revealed Sydney’s market remains patchy, with higher priced markets such as the eastern suburbs, north shore and Hills District leading the falls in prices.

Eastern suburbs prices had the biggest drop over the past quarter, falling by 2 per cent – an average loss equivalent to about $40,000.

North shore prices fell 1.16 per cent (about $20,000) and Hills dwelling prices fell by 1.62 per cent (nearly $30,000) over the quarter.

It was a different story in cheaper areas like Parramatta, the outer southwest and Central Coast, where prices continued to grow over the three months.

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The withdrawal rate of auctions has risen as uncertainty weighs on buyer and seller sentiment.

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Ms Creagh noted that higher interest rates and uncertainty were weighing on confidence but a price crash was off the cards.

“A large correction remains unlikely,” she said. “Strong equity buffers, a resilient labour market and limited forced selling are helping to stabilise conditions and cushion price falls.”

SQM Research director Louis Christopher told The Daily Telegraph the strength of the housing market going forward could hang on what the Reserve Bank says at its next board meeting on Tuesday.

“It’s not just what the RBA does, but what their language is going forward,” he said.

“If their language is hawkish – that this might not be the only rate rise, and that there could be others because we’re concerned about inflation – that’s going to be a real negative for the housing market.”

HOME PRICES CHANGES OVER PAST QUARTER

Source: PropTrack Home Price Index