Sydney house price falls deepen across prestige suburbs
Sydney’s housing downturn is being led by some of its most expensive suburbs, as higher borrowing costs and weaker buyer demand place greater pressure on premium property values.
Cotality data commissioned by The Australian Financial Review shows Malabar, in Sydney’s east, recorded the largest house-price decline identified in the report. Values fell $585,000 this year, or 16.5 per cent, to a median of $2.95 million.
Belmore in Sydney’s inner south-west was down 16.2 per cent, while Wheeler Heights on the northern beaches fell 15.8 per cent. Other large declines shown in the Cotality data included Norwest, Earlwood, Bella Vista and Eastwood.
Premium Sydney homes under greater pressure
The weakness is most pronounced at the upper end of the Sydney market. Houses in the top quarter, valued at $2.36 million or more, have been hit harder than the broader market, according to the report.
Cotality research head Gerard Burg said higher-priced homes had recorded stronger gains in previous years, leaving more room for values to retreat. He also pointed to demand pressures, with fewer buyers able to access the premium segment as borrowing costs rise.
Sydney’s median home value has fallen 7.1 per cent since its February peak. In the upper quarter of the market, prices began falling earlier, in November last year, and are now down 10.1 per cent.
Across Sydney more broadly, residential property values declined 1.4 per cent in August. Cotality said the fall from the February peak equated to an average reduction of $93,220.
The latest snapshot also points to widespread weakness nationally, with prices falling in 93 per cent of suburbs.
CBA cuts housing price forecasts
Commonwealth Bank economists have revised down their housing forecasts after a faster-than-expected adjustment over the past three months.
CBA senior economist Trent Saunders said the bank now expects the downturn to continue through April 2027, with national prices around 9 per cent below their early-2026 peak and values across the five largest capitals around 10 per cent below peak levels.
For Sydney, CBA forecasts a 13 per cent peak-to-trough fall. Melbourne prices are forecast to decline 12 per cent from peak to trough.
The report said the revised forecasts also reflected tax changes announced in the federal budget, including changes to negative gearing and capital gains tax.
Melbourne’s premium market has also weakened. The city’s top quarter is down 12.3 per cent from its November 2021 peak, compared with a 6.8 per cent fall in the city’s median price from its March 2022 peak. Deepdene and Mont Albert were among the hardest-hit Melbourne suburbs, down 15.4 per cent and 15.1 per cent respectively.
Affordability is another factor cited in Sydney’s sensitivity to the downturn. Ray White economist Atom Go Tian calculated Sydney’s median house price of $1.5 million at 12.9 times total full-time earnings, ahead of Brisbane at 10.2 times, Melbourne and Adelaide at 8.8 times, Canberra at 8.2 times and Perth at 7.8 times.
Buyer caution is also showing up in transaction activity. Cotality data cited in the report shows sales are down 19 per cent compared with the same period last year, as buyers weigh the risk of another interest-rate rise and further price falls.
SOURCE ATTRIBUTION:
Based on reporting by The Australian Financial Review, published 2 September 2026. Source: www.afr.com
