Sydney's Housing Market is Showing Signs of Stagnation

Conor's Corner

Sydney’s market has been cooling off steadily since June last year, and the signs now point clearly downward, especially in the Tier 2 segment: high-density areas with high mortgage exposure and greater financial vulnerability. Sure, we might see the odd “blip” from interest rate cuts or bursts of FOMO, but those are just noise. The broader trend is down, and as they say, the trend is your friend.

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Sydney's Housing Market Slows

According to CoreLogic's daily dwelling values index, Sydney recorded a mere 0.1% increase in home values over the past 28 days, the lowest among the five main capital cities. In comparison, Melbourne saw a 0.6% rise, Adelaide 0.7%, and both Brisbane and Perth experienced 0.3% growth during the same period. 

Auction clearance rates further reflect this slowdown. Sydney's final auction clearance rate remained below 60% for the second consecutive week, standing at 59.9%, which is notably lower than Melbourne's 64.1% and the combined capital cities' average of 61.8%.

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Potential for Market Rebound

Despite the current downturn, there is optimism for a market rebound. Financial markets anticipate up to five interest rate cuts by the Reserve Bank of Australia (RBA) throughout the year. If realized, the official cash rate could decrease from the current 4.10% to 2.85% by year's end, potentially improving mortgage affordability and stimulating buyer activity. dailytelegraph

Additionally, recent trends suggest a cautious recovery. After a 2.2% decline from October 2024 to January 2025, Sydney housing values have shown modest growth, with increases of 0.1% in February and 0.3% in March. However, the median property price remains approximately 1.4% below the peak achieved in September 2024. 

Outlook for Sydney's Property Market

While Sydney currently lags behind other capital cities in housing market performance, the anticipated interest rate cuts and signs of gradual recovery suggest potential for improvement. However, affordability constraints and a tight supply may continue to challenge the market's momentum.​Property Update

As the year progresses, stakeholders will closely monitor economic indicators and policy changes to assess their impact on Sydney's housing market trajectory.