Why Are Sydney House Prices Expected to Fall the Most?

The Australian's James Kirby reports on a deepening national housing correction, with property analysts warning price falls could be more significant than previously expected. The article draws on new data and commentary from Cotality, Morgan Stanley, AMP and Oliver Hume Property Group to outline how the downturn is likely to unfold across Australia's capital cities.

How Are Capital City Property Markets Performing?

Cotality research director Tim Lawless has forecast a national housing price fall of about 10 per cent, a figure echoed by Morgan Stanley, while the major banks are tipping a softer decline of between 4 and 8 per cent. Cotality's daily home values indicator shows prices already falling in Sydney, Melbourne, Brisbane and Adelaide, with Sydney considered most exposed due to affordability pressures. Melbourne's flat prices over the past five years may offer some insulation from steeper falls, while Perth, the only capital yet to enter a downturn, is expected to follow the other major cities in the months ahead.

What Do Interest Rates Mean for the Property Market Outlook?

Oliver Hume Property Group chief economist Matt Bell said the latest consumer price index data, which showed annual inflation easing to 3.8 per cent in June, would likely keep the Reserve Bank on hold rather than prompt an immediate rate cut, while the broader property market continues to cool. Mr Bell expects rates to move down in the second half of 2027, noting that market stability will depend on buyers gaining certainty around their borrowing capacity. "The market is clearly cooling, and likely will be until the outlook for rates stabilises, even if that doesn't mean cuts for potentially 12 months," he said. "Once purchasers can lock in their borrowing capacity and budgets with some degree of certainty, markets will start to stabilise."

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