Sydney prices are falling and competition has weakened, but the market is becoming increasingly divided. Buyers have more negotiating power overall, yet quality properties and affordable homes are still attracting strong demand.
Buyers Are Holding Back
Sydney open homes averaged 2.2 potential buyers in September, down from almost four last year. Auctions averaged 1.8 active bidders, compared with 2.9 in 2025.
Early-spring auction volumes fell 31%, while new listings were down 13.2%. Buyers are increasingly avoiding overpriced or compromised properties, but well-presented homes in desirable locations can still perform strongly.
Rate Rise Fears Are Driving Caution
Markets were pricing in a 76% chance of another September rate rise, which would be the fourth increase this year.
With underlying inflation at 3.6%, another rise could reduce borrowing capacity and further weaken confidence. Some economists also warn that continued increases could push the economy towards recession.
Affordable Property Is Outperforming
Demand remains strongest below $1 million as buyers shift towards more affordable suburbs and apartments.
Despite Sydney values sitting 4.9% below their November 2025 peak, several areas recorded strong annual growth. Wentworth Falls houses rose approximately 24%, while units increased 19.1% in Glebe, 17.1% in Bondi Beach and 12.3% in Petersham.
Investors Are Exiting
A national survey found 18.3% of investors sold at least one property during the past year, with more than half purchased by owner-occupiers.
Only 27.8% plan to buy another investment property, while 82% expect rental supply to decline. If this continues, tenants could face fewer available properties and further rent increases.
What It Means
Buyers have greater leverage, but should not assume every property will become cheaper. Quality homes remain scarce and affordable properties can still attract competition.
For sellers, accurate pricing is essential. Sydney is no longer moving as one market—the result depends on the suburb, property type, price and quality.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 18 September 2026
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
Join The Discussion