sydney harbour bridge
The Sydney market is cooling down. Image – Canva.
  • According to SQM Research, Sydney house prices peaked earlier this year
  • Experts across the board predict prices will decline further
  • Vendors likely to sell more properties as interest rates continue to rise

Unsurprisingly, last year was one of the strongest years ever experienced by the Australian property market – in fact, housing values rose by their fastest pace since the late 1980s.

Weekly asking sale prices continued to rise, peaking earlier this year in Sydney, according to SQM Research.


The median value of Sydney property is now more than double that of Perth. This is despite the latter having higher average salaries – although, of course, this is skewed by the resources sector.

However, this year has thrown a few ball curves. Inflationary has reared its ugly head amid ongoing supply shortages and the conflict in Ukraine. This has forced the Reserve Bank to lift cash rates despite being as adamant as late last year this wouldn’t occur until 2024.

The interest rate rise in May was the first rise since November 2010.

The result has been a decline in house prices across Sydney, with many forecasting this trend to continue. According to CoreLogic, dwelling values in Sydney have declined by 1% – 1.5% below the previous high in January 2022.

Along with declining house prices, rental listings are declining – fewer than 20,000 properties have been listed at any given time since February.

A report recently released by Domain has confirmed the slowing growth rate .

“Historically, downturns have been shorter and less severe compared to the preceding
upswing,” said Nicola Powell, Domain Chief of Economics and Research.

“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.”

Dr Powell pointed to research showing that time on the market for property across New South Wales is increasing.

A typical home in Sydney now takes eight days longer to sell, compared to 2021.

Outside of Sydney, property in regional NSW now takes a day longer to sell.

So, what’s in store for 2022?

As we approach the middle of the calendar year, The Property Tribune has spoken to a range of property experts, including real estate agents on the ground, to discuss what they are witnessing and what their predictions are over the coming years.

Sydney Upside Realty agent Byron Selling told The Property Tribune that the recent interest rate hikes had definitely impacted consumer confidence.

“Buyers are a little bit more savvy and hesitant to pull the trigger,” he said.

However, he noted that there is still strong demand for quality properties.

“We’re seeing the market normalising which as an agent mean we need to go back to focusing on price, promotion and presentation.

Byron Selling
Byron Selling. Image supplied.

“In regional areas we are seeing an increase in stock levels and I expect we’ll see a correction there in coming months.

“There’s still future uncertainties with the NSW property market which are yet to play out over the next 5 years – particularly talk of the abolition of stamp duty and how that may affect pricing.”

Ben Plohl, Director & Principal at BFP Property Buyers, told The Property Tribune he expects a flat Sydney market in Sydney during the coming year, with modest drops in some suburbs.

“Supply is likely to increase as vendors try to market their homes before interest rates increase rapidly, which will affect buyer sentiment.”

“I don’t expect a repeat of 2021 where we saw unprecedented growth. I expect the market to return modest annual growth.

“The supply of new dwellings will play a part in the direction of the market. With continued tight supply and a ramp up in demand – even more so from the expected influx of overseas migrants – the market will remain strong.

Ben Plohl, BFP Property Buyers

ben plohl
Ben Plohl. Image supplied.

“The trajectory of the cash rate as well as access to credit and consumer sentiment will play a major part in the direction of the market.”

Mr Plohl expects the rental market to be tighter than the residential market moving forward.

“I expect the apartment market to remain sluggish with the influx of new development projects to hit the market,” he added.

Dr Powell said the decline of prices in Sydney will be determined by how quick and high interest rate rise.

“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.”

Nicola Powell, Domain

nicola powell
Dr Nicola Powell, Domain. Image – LinkedIn .

As always curveballs can be thrown in.

The recent New South Wales budget announced a range of changes, especially to first home buyers, in the form of an option to opt-in into a land tax in lieu of stamp duty and a trial of a shared equity scheme.

This is likely to influence demand from the this sector of the market, who are increasingly priced out.

“For a first home buyer looking for an entry-level property, there’s an opportunity to buy a home without paying the stamp duty,” explained Tim McKibbin, Chief Executive Office of the Real Estate Institute of New South Wales (REINSW).

“At face value, this is positive news, as it means they’ll have more money to spend on the property itself, making them more market competitive. However, if the first home buyer is buying their ‘forever home’, then this option becomes less attractive.” 

Tim McKibbin, REINSW

He argued in the immediate term there may be some hesitation from first-home buyers, which could impact demand.

“For first home buyers in the market now, the question is ‘should I wait for the reforms to kick in?” They may be eligible for a stamp duty refund but would still need to fund the stamp duty at the point of purchase,” he said.

He also argued the shared equity scheme is more of a “political move than an affordability solution.”

“Its potential impacts as an affordability reform are questionable as its scope is clearly limited, in relation to the occupations it applies to, who must also be first home buyers.”

Andrew Graham, CEO of Rental Management of Australia, told The Property Tribune that he expects rental demand to remain strong given the tightening market and migration.

“Demand for free standing family homes are in limited supply across all rental price points and in my opinion will continue with the increase in migration over the year,” he said.


If you would like to read commentary from the other capital cities, do read the below:

Brisbane Property Market Predictions

Melbourne Property Market Predictions

Darwin Property Market Predictions

Canberra Property Market Predictions

Perth Property Market Predictions

Adelaide Property Market Predictions

Gold Coast Property Market Predictions 

Hobart Property Market Predictions

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