Image – Canva
  • Sydney's house prices increased 40% from the trough in June 2020 through to March 2022
  • Domain's freshly released NSW Spotlight Report indicates the city's housing market is cooling
  • Prices are not likely to dip to pre-pandemic levels

Sydney’s skyrocketing property prices made headlines over the past two years, but Domain‘s freshly released NSW Spotlight Report suggests the market is now cooling although unlikely to dip below the pre-pandemic levels any time soon.

In what was the quickest and sharpest equity boost on record, Sydney’s house prices rose 40% from the trough in June 2020 through to March 2022. But property values in Australia’s most populous state have been on the rise over the past decade and Sydney is now established among the most expensive housing markets in the world.

Domain’s Chief of Economics and Research, Dr Nicola Powell said that the NSW property market has been an understandably hot topic of discussion in recent years, and she expects that it will continue to be so.

“House prices across all Sydney suburbs experienced an increase in price over the past year, ranging from 6% to almost 58%, widening the wealth divide between homeowners and non-homeowners, and stretching the ability of others to upsize.

“It’s pretty easy to find a million-dollar suburb in Sydney, with many regions having none below that price,” Dr Powel said.

Reprieve for buyers on the horizon

Dr Nicola Powell. Image- Domain

The latest report from Domain notes that Sydney’s price growth rate is experiencing one of the most substantial slowdowns of all Australian capitals.

This confirms data released by CoreLogic earlier this month. 

“Historically, downturns have been shorter and less severe compared to the preceding

“We are expecting the slowdown in price growth to continue and purchasing conditions to improve for buyers but it is unlikely we will see a return to pre-pandemic prices.”

Nicola Powell, Domain Chief of Economics and Research

The time on the market for property across NSW is lengthening. A house in Sydney can be expected to take eight days longer to sell than at the faster point in 2021. Similarly, houses in regional NSW are on the market for an extra one day.

Sydney supply recovering

Coupled with slowing selling times is an increased supply. The number of houses on the Sydney market is up by 8% and up 10% for units, annually.

Regional supply remains challenging with the total number of houses for sale up only 1% compared to last year and the number of units down 13%.

Data from SQM research demonstrates the trends in Sydney’s property stock over the last few years. This data shows the combined unit and housing stock.


“Sellers have become more strategic with their market timing, listing homes for sale while prices remain close to a peak and before additional interest rates rise further puts a strain on borrowing capacity and mortgage affordability.

“This is encouraging for buyers as they slowly take back charge as the supply of properties for sale builds, creating better purchasing conditions, providing home hunters time to contemplate rather than compromise, and ultimately allowing rational decisions to be made.

“There is greater choice and the pleasure of taking a little time if you’re looking to buy,” Dr Powel said.

Where to from here?

Interest rates are on the rise reducing the borrowing capacity of many buyers and increasing the cost of a home loan.

Domain points out that the rate decline in property prices will be largely determined by high and quickly interest rates rise, and how high inflation reaches.

“The current level of household debt makes Australian mortgage holders sensitive to
higher interest rates that will squeeze household budgets. The higher level of debt means that the RBA won’t need to increase rates as much as it has in the past to cool inflation,” Dr Powell said.

“Property prices are partly driven by momentum, which means when prices fall this is likely to lead to further price falls – fear can feed fear, both positively and negatively.”

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