Sydney’s property price slide as rate rises bite

Sydney’s property market continued its downturn in May, with home prices falling by 2% after three interest rate rises this year, according to the latest PropTrack Home Price Index. This marks the third consecutive monthly decline, with prices down 1.2% from their peak in late February. The data highlights that inner-city, upmarket, and waterside suburbs are experiencing the steepest drops, with some areas seeing annual declines of nearly 30%. REA Group Senior Economist Angus Moore noted that while the May drop was not extreme, it translates to significant financial losses given Sydney’s high property values. He attributed the decline to economic pressures, including three rate hikes and the possibility of further increases this year. Moore also pointed to softer auction clearance rates, which have fallen below 50% in recent weeks, further dampening buyer confidence. Sydney’s median house price remains at $1,604,000, reflecting ongoing affordability challenges despite the recent declines. Units also saw a 0.4% monthly drop, with a median price of $884,000, offering a more affordable entry point for buyers. Moore emphasized that rising interest rates are pushing buyers toward more affordable options, though he cautioned that the cumulative rate increases so far are still lower than those seen in 2022 and 2023. The economist stressed that Sydney’s housing market remains the least affordable in Australia, partly due to its high-income economy but also because of limited housing supply. He urged increased construction to ease demand and improve affordability, noting that the current market conditions are likely to persist through the rest of the year.