Sydney Property Market – Prices, Trends, Forecast [January 2026]

Sydney’s housing market ended the year with a slight pullback, reflecting softer momentum after a strong run through 2025. Values edged down -0.1% over the month, while the median dwelling value sits at $1,280,613.

Despite the late-month pause, conditions still look more like a plateau than a reversal, with Sydney effectively hovering around its recent high-water mark.

Market Highlights

• Sydney values eased -0.1% over the month, signalling a late-year cooling after earlier momentum.
• The market still held a solid annual gain of 5.8%, with a median dwelling value of $1,280,613.
• Quarterly growth remained positive at 0.8%, suggesting Sydney is closer to a plateau than a clear downswing.
• Longer-term performance stayed strong, with values up 36.2% over five years and only 0.1% below the most recent peak.
• Affordability pressures continued to shape buyer behaviour, with weaker growth at the top end and relatively stronger demand in lower-to-mid price points.
• Some of the strongest annual gains across Greater Sydney were concentrated in more affordable pockets, including Merrylands, Guildford and St Marys.
• Investor income remained tight relative to prices, with Sydney holding the lowest gross rental yield among the capitals at about 3.0%.

Housing Metrics Overview

See how Sydney’s property values have performed across houses and units over various timeframes, along with returns, yields, and median prices.

Watch CoreLogic’s January 2026 Housing Market Update for expert commentary on national and capital city housing trends, price movements, and key market drivers across Sydney.

Sydney Property Price Growth

Over the past year, Sydney dwelling values rose 5.8%, and the most recent quarter delivered a modest 0.8% lift. Total returns (including income effects captured in the index) were 9.0% over the year.

On a longer lens, Sydney is only 0.1% below its most recent peak (dated Nov-25), with values up 36.2% over the past five years. Since the first rate cut cycle began in February, values have increased 5.7%.

Sydney Property Market Trends

Affordability constraints remain a defining feature in Sydney, pushing more activity toward lower-to-mid price points while higher-end segments contribute less to growth than earlier in the cycle. This pattern has been visible across capitals and aligns with Sydney’s more subdued headline outcomes.

Within Greater Sydney, the strongest annual value gains have been concentrated in more affordable corridors. Areas such as Merrylands, Guildford and St Marys recorded 12.5% annual growth, with other standouts including Richmond, Windsor (11.6%), Campbelltown (11.3%), and Penrith (11.2%).

On the income side, Sydney continues to run the lowest gross rental yields among capital cities at around 3.0%, edging slightly lower over the year.

The table outlines CoreLogic’s Home Value Index as of 2nd January 2026, showing peak declines, five-year growth, and changes since the first rate cut in February.

Sydney Property Market Forecast

Sydney is positioned for a softer growth phase through 2026. Interest-rate uncertainty, inflation sensitivity, and tighter serviceability conditions are likely to weigh most heavily on higher-priced markets, which makes Sydney particularly exposed to slower turnover and flatter growth.

A sharp downswing still looks less likely while housing supply remains constrained and stock levels stay tight, helping to put a floor under values even as demand cools. The most probable path is modest, uneven growth rather than a broad-based surge.

The Reserve Bank of Australia’s ongoing adjustments to interest rates will likely play a crucial role in shaping market dynamics, as higher borrowing costs limit purchasing power for many buyers.

Here are some of the most recent forecasts by the big-4 banks in Australia:

• ANZ predicts a 5-6% increase in capital city property prices in 2024, with Brisbane expected to see the highest rise at 9-10%, Perth property values could go up by 1-11%, Sydney by 4-5%, and Melbourne prices by 2-3%.
• CBA forecasts a 5% rise in capital city prices, with some variations: Brisbane is anticipated to grow by 6%, Melbourne and Perth by 5%, Sydney by 4%, and Adelaide by 1%.
• NAB projects a 5.4% average increase across the capitals, with Brisbane expected to see a 6.5% rise, Perth and Adelaide by 6.2%, Melbourne by 5.5%, Sydney by 5%, and Hobart remaining flat.
• Westpac expects a 6% growth across the combined capitals, with Perth leading at 10%, followed by Brisbane at 8%, Sydney at 6%, Adelaide at 4%, and Melbourne at 3%

Oxford Economics recently released property forecasts predicting where house prices will be in three years.

Conclusion

Sydney finished the year with a small monthly dip but stayed close to peak levels, supported by the same structural undersupply that has underpinned prices for several years. Annual growth remained positive, and stronger conditions were most evident in comparatively affordable sub-markets.

The year ahead looks slower and more selective, shaped by affordability and rate expectations. For buyers and sellers, the market profile suggests steadier conditions, with outcomes increasingly driven by price point and location rather than a rising tide lifting all segments.