The Sydney housing market has been a subject of considerable fluctuation over the past six years. From a period of rapid growth in 2021 to a current slowdown in 2024, the market is facing major shifts. Rising interest rates, high inflation, and changing buyer sentiment are some of the leading factors causing house prices to slash and trends to change.
In 2018, the Sydney housing market saw a significant downturn due to tighter lending conditions and weaker market sentiment, following a boom between 2012 and 2017. Housing values in Sydney dropped by around 10% in 2018, according to CoreLogic, primarily because of tighter credit availability and a banking royal commission that led to stricter borrowing conditions. Median house prices at the time hovered around AUD 1.03 million. As the market recovered in 2019, a combination of lower interest rates and an easing of lending restrictions led to a slow but steady rise in prices. By 2020, Sydney’s median house price had risen again to approximately AUD 1.1 million, bolstered by demand from homebuyers taking advantage of record-low interest rates during the pandemic.
Boom to Slump: 2021–2023
2021 marked a historic boom for Sydney’s housing market, with house prices increasing by more than 20% year-on-year. At its peak, Sydney’s median house price reached AUD 1.4 million, driven by pandemic-related demand, government incentives, and low borrowing costs. However, the price surge created affordability issues, particularly for first-time buyers.
By late 2022, the Reserve Bank of Australia (RBA) began increasing interest rates to combat rising inflation, leading to a cooling of the market. By mid-2023, Sydney’s housing price growth slowed significantly, with some areas starting to see price declines. The slowdown was further impacted by rising household debt, and CoreLogic reported that Sydney’s home prices dropped by approximately 6% between mid-2022 and early 2023.
2024: A Turning Point
| YEAR | Median House Price | Annual Change | Key Factors |
| 2018 | $1,062,619 | -8.9% | Falling demand due to tighter lending conditions, rising interest rates, credit restrictions by APRA |
| 2019 | $1,028,100 | -3.2% | Recovery starting to form after 2018’s large drop, but slow due to credit access and uncertainty |
| 2020 | $1,155,000 | +12.3% | Market recovery accelerated by record-low interest rates amid COVID-19 |
| 2021 | $1,437,000 | +25.0% | Booming market driven by historically low interest rates, government incentives, and buyer demand |
| 2022 | $1,251,600 | -13.0% | Sharp decline due to rapid interest rate hikes from the RBA, rising cost of living, and reduced borrowing power |
| 2023 | $1,198,500 | -4.2% | Continued price falls, high interest rates limiting buyer capacity, cooling market |
| 2024 | $1,210,000 (est.) | +1.0% (stabilizing) | Market stabilizing as inflation pressures ease, though interest rates remain high |
1.2018-2019: The Sydney property market fell sharply in 2018, by 8.9%, due to stricter financing and limited borrowing capacity. This trend continued, albeit at a reduced pace, into 2019, with a 3.2% drop.
2.2020-2021: The market recovered in 2020, witnessing a 12.3% growth due to decreased interest rates, and rose further in 2021 with a 25% gain led by a combination of cheap borrowing costs and robust demand.
3.In 2022-2023, the RBA boosted interest rates to combat inflation, causing Sydney house values to fall dramatically again. The market dropped by 13% in 2022, with a further 4.2% reduction in 2023.
4.2024: Analysts anticipate that the market will stabilise in 2024, with a small 1% growth as the impact of interest rates and economic pressures diminish.
Fast forward to 2024, and Sydney’s housing market has entered a sharp correction phase. Auction clearance rates have fallen below 60% for the first time this year, a clear indicator of declining demand. Rising interest rates—up to 4.35% after 13 consecutive rate hikes—have significantly reduced buyers’ borrowing power, forcing house prices downward .
CoreLogic data shows that Sydney home values grew by only 0.1% over the last 28 days, with a forecast of further price drops before the market stabilizes. In fact, predictions suggest Sydney’s property prices could decline by as much as 4% by the end of 2024, making it one of the most significant housing corrections in recent years .
Changing Buyer Sentiment
A major shift in buyer sentiment is also notable. In 2021, buyers were scrambling to enter the market, fearing further price increases. By 2024, prospective buyers will have adopted a “wait and see” approach, anticipating further price reductions amid rising interest rates. Additionally, there has been an increase in listings as sellers, particularly investors, exit the market to avoid high holding costs. The Sydney housing market has undoubtedly entered a correction phase after a historic boom, reflecting broader economic challenges. The data from 2018 to 2024 shows that while the market has seen incredible growth, it is now contending with the consequences of high borrowing costs and affordability issues. As 2024 progresses, Sydney’s housing market will be one to watch, with experts predicting further declines before a potential recovery in the coming years.
By analyzing these trends, prospective buyers, sellers, and investors can better understand the evolving market and make informed decisions.
