Michael Yardney , Founder
Sydney dwelling values increased by 0.7% in October, bucking the broader national trend where most capital cities saw an acceleration in value growth. For the Sydney market, this milder rate of gain—easing from 0.8% over the preceding two months—may signal that affordability challenges are finally beginning to curb demand.
Despite the slight moderation, Sydney’s market still remains highly active, supported by persistently low supply levels.
The key insights reveal a shift in where the growth is concentrated across the city.
Growth Trends Across Price Points
The strongest growth in October was notably skewed towards the middle of the pricing spectrum. This indicates that while the most affordable parts of the market remain strong, the premium end is showing the least resilience, likely due to mounting affordability constraints at the top end.
| Market Segment (by Value) | Monthly Value Growth (October) |
|---|---|
| Middle of the Market | 1.0% |
| Lower Quartile | 0.8% |
| Upper Quartile (Most Expensive Homes) | 0.3% |
Source: Cotality, November 2025
Supply and Demand Dynamics
Sydney continues to face a scarcity of listings. Although not as severe as in markets like Perth or Adelaide, advertised stock levels remain tight, supporting vendor confidence and keeping upward pressure on prices:
- Advertised stock levels are almost 12% lower than at the same time last year.
- Stock levels are tracking 2.7% below the five-year average.
- Sales activity remains resilient, acting as a strong proxy for sustained housing demand, despite stretched affordability.
Outlook and Economic Headwinds
The market is being influenced by several powerful, opposing factors:
On one hand, persistently low advertised supply and resilient housing demand are supporting value growth. On the other hand, a renewed inflation challenge and the prospect of a shallower interest rate cutting cycle are dampening expectations.
Banking economists are no longer forecasting further rate cuts in 2025, which means a material boost to borrowing capacity is unlikely.
Further downside risks include:
- Severe affordability challenges and stubbornly low consumer sentiment, exacerbated by cost-of-living pressures.
- Potential tightening of investor credit policies. Housing credit for investors is rising rapidly, a trend that could lead to regulatory intervention and curb demand from this segment, which comprises an above-average 38% of mortgage demand.
Despite the easing pace of growth in October, the fundamental imbalance between supply and demand is likely to persist for a while yet, continuing to support Sydney home values.
