Sydney's affordable house prices increase despite premium location downfalls

Sydney's housing market is experiencing a significant downturn, with house prices recording their largest quarterly fall in Australia at 3.3%. This decline, equating to about $60,000 shaved off the median house price in just three months, marks the first quarterly drop in approximately 3.5 years. However, the impact is not uniform across the city.

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Those areas that are outer suburbs that are much more affordable, these are areas that are actually still rising in price

Property experts note that the downturn has primarily affected "premium locations" in Sydney's north and east. In contrast, historically more affordable outer suburbs are showing resilience, with some areas, like the outer south-west, experiencing price increases of nearly 13% over the past year. Suburbs like Penrith and Fairfield have seen unit prices rise by $12,000 compared to the previous quarter.

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What you tend to find when Sydney moves into a downturn, what moves first and what sees property prices fall first are the premium locations. Then what happens over time is it ripples out. It ripples to those middle suburbs and often you tend to find those very outer suburbs either don't see a fall, or if they do see a fall, it's much more marginal.

Real estate professionals observe that buyer confidence is at an "all-time low," influenced by economic factors such as budget announcements, tax reforms, and the high cost of living. This uncertainty is making many first-home buyers hesitant, particularly those saving for a deposit, as they fear losing their investment with falling prices. While demand for units persists due to affordability, houses and properties with land remain out of reach for many.

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Buyer confidence is at an all-time low

NSW Housing Minister Rose Jackson acknowledged the market shift but cautioned against reading too much into the early changes, stating that housing in Sydney remains "really expensive." The trend suggests that while premium markets may fall first, the effects typically "ripple out" to middle and outer suburbs over time, though outer areas often experience more marginal falls or no fall at all.

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We're seeing first home buyers hesitant to buy, they're waiting for the bottom-end of the market. Young first home buyers have got their savings to invest in a property, and that deposit that they initially outlay with falling prices, are scared to lose that.