Sydney is experiencing a huge drop in house prices.

March 11, 2026

Cotality’s daily house values index reports that Melbourne house values have fallen by 0.1% over the past 28 days, while Sydney has recorded a 0% increase:

Sydney is experiencing a huge drop in house prices.

This week’s Westpac-Melbourne Institute consumer sentiment survey for March showed that while consumer expectations for house prices remain strong, sentiment around whether it’s a good time to buy a home has fallen sharply:

Chart by Shane Oliver (AMP)

As Justin Fabo from Antipodean Macro explains below, homebuyer sentiment has fallen sharply in Sydney in particular, reflected by a slowdown in house price growth.

Leading property market analyst Louis Christopher from SQM Research has updated his house price forecast in light of the war in the Middle East and an upgraded inflation outlook, with the interest rate futures market now fully set for two additional rate hikes in 2026, with a third likely.

RBA Cash Rate Pricing

“We have lowered our forecasts for Sydney and Melbourne with this revision. We now expect house prices to fall by 6% in Sydney over 2026 and by 4% in Melbourne over 2026,” he said. Christopher said in his podcast.

“In particular, Sydney’s economy is driven in many respects by its financial services sector. Unfortunately, financial services as an industry does not fare well in times like this”.

“So it’s likely that we’re going to see job losses in the financial services sector, which will have a drain on the local economy, which in turn affects the housing market,” he said. Christopher said.

Christopher also noted on Twitter (X) that Sydney recorded it. “Second week of March results in weakest clearance rate since our results began in 2020”.

The concern around Sydney in particular is well established. It is the most expensive housing market in the country and therefore the most sensitive to interest rate hikes.

A 0.25% rise in mortgage rates adds $138 to monthly payments on the average new mortgage of $873,000 in NSW:

So, if the RBA were to raise rates twice more, Australia’s official cash rate would return to its recent peak of 4.35%, pushing the average variable mortgage rate up to 6.25%.

The average new mortgage holder in NSW will see their minimum mortgage payment rise by a total of $418 a month over what they would have paid had the RBA not tightened.

It’s no surprise, then, that Louis Christopher predicts a huge price drop for Sydney’s housing market.