House prices in some Sydney suburbs with medians of $2 million or more have declined by up to 7.5% in the past three months due to affordability issues and interest rate uncertainties, CoreLogic reports. Over 40% of these expensive suburbs, particularly on the northern beaches and in the inner south and inner west, saw price drops despite a city-wide increase of 1.1% in house values during the same period.
Conversely, several suburbs with median house prices below $2 million saw gains of up to 7% in three months. Tim Lawless of CoreLogic noted that rising interest rates and stagnant income growth have weakened high-end markets. Further interest rate hikes could spread these weaknesses and slow growth over the next three to twelve months.


In detail, 44% (76 out of 173) of suburbs with medians at $2 million or higher have seen price drops recently. Forest Lodge and Glebe in the inner south posted the largest declines at 7.5% and 7.1%, respectively. Abbotsford in the inner west saw a 5.8% decline, while Concord’s prices fell by 3.9%. The northern beaches suburbs of Avalon Beach, North Manly, Palm Beach, and Narrabeen experienced drops between 3.9% and 4.4%, while Darlinghurst fell by 3.7%. Vaucluse’s median value tumbled by 4.2% to $8.8 million.
During their peak last year, house prices in Forest Lodge and Glebe surged by 9.6%, while Abbotsford, Vaucluse, North Manly, and others climbed by over 10%. However, recent borrowing capacity cuts and economic uncertainties have significantly reduced demand for high-priced properties. Borrowing capacity has been slashed by 40%, making it more challenging for buyers to secure finance for properties over $2 million. Higher interest rates and increased living costs have further shrunk the pool of potential buyers who can qualify for large loans.
Real estate experts report that even wealthy buyers are now cautious, leading to fewer transactions in Sydney’s expensive suburbs. Similar trends are evident in Melbourne and Brisbane, where high-end house prices have also declined. In Melbourne, suburbs like Flinders and Caulfield saw drops of 5.7% and 4.8%, while Brisbane’s Bulimba and Ascot experienced declines of up to 2.4%. Affordability issues, both in property costs and living expenses, are impacting buyers’ serviceability and borrowing capacity, making them less willing to take on large debts.
Poor affordability and interest rate uncertainty have shifted demand from middle-priced properties in Sydney to more affordable options in other cities, according to CoreLogic. Suburbs in Sydney’s inner south-west, such as Banksia, Bexley, Arncliffe, and Belmore, saw strong price increases. Similarly, Melbourne’s Balaclava, Brunswick West, and Oakleigh East, with slightly lower median prices, also experienced gains.