Sydney’s property market has moved into a significant downturn. Cotality’s Home Value Index, released on 2 November 2026, shows dwelling values fell 1.6% in October and are now 10.1% below their February peak. At the same time, the Reserve Bank of Australia (RBA) has raised the cash rate again.
If you’re looking to buy, already own a home or are weighing up an investment, it’s understandable to wonder whether this is the moment to act. There isn’t a single right answer. The decision depends on your finances, your plans and whether the numbers still work if conditions remain tough.
What’s happening in the Sydney market?
The latest figures show a sharp change in momentum. National dwelling values have fallen for seven consecutive months. Combined capital-city values are down 8.1% from their March peak, in a downturn ABC News describes, citing Cotality data, as the fastest in 40 years.
AAP reporting puts the fall in the average Australian dwelling at roughly $63,000 since March. That national figure is distinct from Sydney’s 10.1% decline, which is measured from the city’s February peak.
The rate environment is adding pressure. On 3 November, the RBA lifted the cash rate by 0.25 percentage points to 4.85%, its fifth increase of 2026 and the highest level since 2008. The RBA’s decision{:target=”_blank” rel=”noopener”} cited inflation concerns and noted that higher interest rates and falling housing prices and turnover are expected to weigh on dwelling investment and household spending.
Forecasts differ. CommBank economists have been reported as tipping a national peak-to-trough fall of around 14%. The Australian Financial Review has reported a forecast that Sydney house prices could fall by about $200,000, taking values back towards 2023 levels by the end of the downturn. These are forecasts, not certainties. Other market commentary points to possible stabilisation during 2027, if interest rates settle and confidence improves.
Should you buy now?
A falling market can give prepared buyers more room to negotiate. Homes are taking longer to sell, and reporting by realestate.com.au describes rising distressed listings. Its coverage also points to differences across the city: budget and outer-ring areas have been more resilient, while some inner suburbs have fallen harder. Conditions vary by property, price bracket and location, so broad market figures won’t tell you what one home is worth.
A longer time on market may give you more opportunity to ask questions, arrange inspections and negotiate terms. But a lower asking price does not automatically mean a home is affordable for you.
The challenge is that borrowing capacity may be shrinking faster than property prices for some buyers. The Australian Prudential Regulation Authority (APRA) has kept the mortgage serviceability buffer at 3 percentage points. This means lenders generally assess whether a borrower could manage repayments at an interest rate three percentage points above the loan rate. Depending on the loan, that assessment rate can approach or exceed 9%.
As a result, a buyer may find that a 10% price fall does not translate into 10% more buying power. The APRA update{:target=”_blank” rel=”noopener”} confirms the buffer remains in place.
Buying now may be worth exploring if you have stable income, a suitable deposit, a clear plan to hold the property and enough room in your budget to manage repayments if rates stay high. Check your numbers using our borrowing power calculator, then treat the result as an estimate rather than a loan approval. You can also explore our home loan options and buy-a-home support.
Is waiting the safer choice?
Waiting can give you time to save, reduce debt or see how your income and expenses respond to higher rates. It may also help you avoid stretching your budget just to secure a property.
But waiting for both lower prices and lower interest rates can backfire. Buyers often return when they feel rates have peaked or the market has stabilised. If more buyers compete for homes at that point, prices may stop falling or begin rising before borrowing costs ease significantly. In other words, the price and rate movements you hope will line up may not arrive together.
News.com.au has reported that buyers and sellers are holding back while they wait for a clearer signal on rates. Some market commentary expects weakness to continue through the first half of 2027, with stabilisation later in the year; a sustained recovery would depend in part on the RBA signalling that rate cuts are approaching. Neither timing nor the eventual market bottom is knowable in advance.
The Cotality-based ABC News report{:target=”_blank” rel=”noopener”} gives a useful snapshot of the current decline, but it cannot tell you when a particular suburb or property will reach its lowest point. Consider waiting if you need more financial breathing room, but set clear conditions for revisiting the decision rather than relying on a perfect market signal.
What if you already own a property?
For existing owners, the fall in values can affect your equity and your options. If your home’s value drops while your loan balance stays similar, your loan-to-value ratio (LVR) rises. That can matter if you want to refinance, release equity or borrow for another purchase.
Refinancing may still be worth reviewing, but switching lenders is not automatic. A new lender will assess your current income, expenses, debts and capacity to make repayments. The serviceability buffer can make approval harder, particularly if you need to increase your loan or your income has changed. A lower advertised rate may not produce a better outcome once fees, loan features and approval requirements are considered.
If you’re reviewing your options, our refinancing home loan service can help you compare potential structures and lender requirements. It’s also sensible to check your household budget against higher repayments and consider whether you can hold the property comfortably if values take longer to recover.
Buy, refinance or wait: what should guide your decision?
Rather than trying to call the bottom, focus on the decision you can control. Ask yourself:
- Can you comfortably meet repayments if rates stay high or rise further?
- Does the property suit your needs or investment plan beyond the next year or two?
- Do you have enough savings for costs, repairs and unexpected changes in income?
- If refinancing, does the potential benefit outweigh the costs and the hurdles of a new assessment?
- If you wait, what specific change would prompt you to review your plans?
At Stellar Finance Group, we’re here to make complex lending decisions clearer, not to tell you when the market will turn. A falling market can create opportunities, but borrowing capacity, loan structure and your own financial resilience matter just as much as the purchase price.
If you’d like to talk through your circumstances, meet with our team. We can help you understand the finance options to explore, whether you’re buying, refinancing or taking time to plan. This article is general information only and does not take your personal circumstances into account.
