Sydney house prices are falling - just not in the suburbs you’d expect

October 30, 2026 — 5:00amProperty price falls have extended beyond Sydney’s prestige enclaves to more affordable suburbs as the downturn becomes more widespread.Marsfield in the Ryde-Hunters Hill area experienced the greatest price drop, falling 22 per cent in the12 months to September, according to the latest Domain House Price Report. Prestige beachside suburb Bronte experienced the second-greatest fall in house prices, down 15.2 per cent over the same period. The median house price in each suburb is now $1,485,000 and $5,235,000 respectively.Across Sydney, the cost to buy the typical house fell by 5.8 per cent over the year to $1,661,167.For units, prices in Darling Point fell the most, down 16.8 per cent, followed closely by Redfern, which declined by 16.2 per cent.At the other end of the spectrum, house prices in Prospect and Richmond in outer western Sydney, and inner west heritage suburb Haberfield all rose more than 23 per cent in the past year.For units, it was Wahroonga where prices rose the most – up 25.1 per cent. The median price for an apartment in the suburb is now $1,185,000.Price sensitive SydneyDr Nicola Powell, Domain’s chief residential economist, said the ongoing effects of the downturn, with house price falls in all Australian capitals over the September quarter, was always felt most keenly in Sydney.“Sydney is very sensitive to changes in interest rates because it is so highly priced,” she said.“When you go into a market of weakness, this is when buyers shift from fear of missing out to fear of overpaying. They want every dollar to work much harder than it has ever before.”Ray White chief economist Nerida Conisbee said the scattered nature of the price falls across all parts of the housing market indicated that the downturn had become more entrenched, as the impact of rate rises, higher inflation and Federal budget changes announced in May played out.However, she said it was still the upper end of the market bearing the brunt.”Since the budget, we are starting to see a bit more stabilisation at the top end, but the lower end is starting to fall because we are seeing far fewer investors.”This has been coupled with fewer listings, week on week, and longer days on market as both vendors and buyers navigate an uncertain market.“People think real estate agents want high prices all the time but [they] need turnover of stock. The uncertainty we’re seeing, there are far fewer buyers [active],” she said.Silver lining - for someFor Allanah Zitserman, the recent downturn in the market has come with a silver lining. She bought a 19 square metre studio apartment in Potts Point in August for $380,000.“I have been manifesting this for at least eight years,” she said. “It was all I could dream about.”Allanah Zitserman fell in love with the art deco buildings in Potts Point.Sam MooyZitserman, who has bought and sold property in Sydney and regional NSW in the past, said she had been “waiting for this moment”.“I was prepared for it,” she said. “When I saw the market going down, I started to ramp up my energy around it. I saw probably 30 or 40 places in this area.”Zitserman said she first looked around Annandale and Glebe – in the same part of Sydney where she rents a home with her two teenage daughters – before zeroing in on Potts Point. She plans to stay in the apartment in the art deco building when she can, as well as rent it as short stay accommodation.Allanah Zitserman said she had been dreaming of buying a small apartment. Then the market shifted.Sam Mooy“[Renting it out] is a great way to afford property rather than it just sitting there empty,” she said. “It was affordable because of the timing. The plan is a full lifestyle where I can give everything I can for my children and still have something for myself.”Sales agent for BresicWhitney East Nuri Shik said his last half a dozen sales had all been to owner-occupiers snapping up studio and one-bedroom apartments in areas such as Darlinghurst and Rushcutters Bay.“With Allanah’s purchase, the owner had [held] it as an investment for 30 years,” Shik said. “Once upon a time, an investor would have bought those places.“I am trying to encourage all first home buyers. It is the best time to buy when there is uncertainty.”The hardest thing to sway right now, said Powell, was buyer sentiment.“The market at the moment is a mix of psychology and economics influencing it,” she said. “[There is] a lack of confidence stemming from a perception that property prices will fall further.“[Buyers] want to feel they are getting good value.”Property alerts are now available in the SMH app. Turn them on to receive the latest market news and trends.Property listingsFrom our partners