Sydney’s Eastern Suburbs Market in 2026, How We Compare to the World

Market commentary, 28 September 2026

The tide is going out everywhere. Sydney is just further up the beach.

Rates are rising across the developed world. But the correction in Sydney’s Eastern Suburbs is being driven as much by what is happening at home as by anything overseas.

Alan Weiss, Principal, Weiss Real Estate

Tomorrow afternoon the Reserve Bank meets again. The market has already made up its mind. Traders price a hike to 4.60 per cent as close to certain. If it lands, the cash rate will sit at its highest level since November 2011.

Buyers feel it before the decision is announced. They have felt it all year. The RBA lifted rates three times in a row up to May. It paused in June and August. Now it is back.

Many clients ask me the same question. Is this a Sydney problem, or is it the world? The honest answer is both. But the local part matters more than most people think.

−8.0%Sydney dwelling values from the early-March peak, Cotality daily index

−10.7%Sydney’s most expensive quarter of houses, from peak

42%Sydney clearance rate last week, against 70% a year ago

Sources: Cotality Home Value Index and September Chart Pack; Domain auction results, week ending 26 September 2026.

What the numbers are saying

Sydney is the weakest capital in the country. Values fell 1.4 per cent in August alone. By the end of that month the city was 7.1 per cent below its February peak. That is a faster fall than the same stage of the 2022–23 correction, when values were down 6.6 per cent. The daily index has since moved to minus 8.0.

This is no longer a pocket of weakness. Across the capitals, 93 per cent of suburbs recorded a fall in value over the three months to August. Three months earlier the figure was 45 per cent.

Houses are carrying the weight. Sydney house values are down 5.5 per cent over the year. Units are down 2.3. And the top end is falling hardest of all. Upper-quartile houses in Sydney are now 10.7 per cent below their peak.

That last figure is the Eastern Suburbs figure in all but name. When the first cracks appear in a correction, they appear in the most expensive homes. They did here.

How deep is this correction?

Sydney peak-to-trough falls, Cotality. The 2017–19 fall is the deepest on record for the city.

Fewer buyers, and more sellers walking away

The auction floor tells the story plainly. Last week Sydney cleared 42 per cent. The same week last year it cleared 70. Of the 658 auctions reported, 232 were withdrawn. That is vendors deciding not to test the market on the day.

The City and East region has been volatile. It cleared above 70 per cent on one weekend in early September. Two weeks later it cleared under 48. Small weekly samples swing hard. The trend is what counts, and the trend is softer.

Cotality describes this as a demand-led downturn. Quarterly sales are running 15.5 per cent below a year ago. That matches what I see at open homes. The buyers who come are serious. There are simply fewer of them. Upsizers and investors have gone quiet. Downsizers and first home buyers are still keeping the better apartments competitive.

Buyers have not disappeared. They have become selective, patient and very well informed.

So is this a global story?

Partly. Energy prices have spiked with the conflict in the Middle East, and central banks almost everywhere have turned hawkish again. The Bank of England, the European Central Bank and others have all been lifting or holding firm this year. Money is getting dearer across the developed world.

Australia already sits at the top

Policy rates, latest announced settings. RBA shown at today’s 4.35% with the expected 4.60%.

Sources: RBA; Bank of England rate as reported mid-2026; ECB decision of 10 September 2026. Bank of England figure may have moved since.

But look at the property markets underneath those rates. They are not moving together.

The United Kingdom has stalled rather than fallen. Nationwide’s average price went nowhere through mid-year as energy costs and mortgage rates bit. Most British borrowers sit on fixed rates, which slows the pain.

New Zealand and Canada took their hit earlier. In the first quarter of this year, real prices fell around 7 per cent in Canada and around 4 per cent in New Zealand, according to the Bank for International Settlements. Those markets have been correcting for years. We are only now catching up.

And there is a reason we are catching up hard. Since the end of 2019, real house prices in Australia rose 23 per cent. Across the world they rose less than 3. We went into this cycle more expensive, with more of our borrowing on variable rates, and with inflation that simply will not settle. Trimmed mean inflation is still 3.6 per cent. The RBA’s target is 2 to 3.

The local factor nobody should ignore

In May the federal government changed the rules for property investors. From 1 July 2027, negative gearing is limited to new builds for anyone who bought an established home after Budget night. The 50 per cent capital gains tax discount is being replaced with indexation and a 30 per cent minimum rate. These measures are now law.

Existing investors are grandfathered. But the next buyer is not. The Eastern Suburbs is almost entirely established housing. That quietly removes a slice of future investor demand from exactly the stock we sell. Overseas markets have rate pressure. We have rate pressure plus a tax reset. That is the Sydney difference.

Where are we heading?

I have seen enough cycles to be wary of anyone who claims to know the bottom. But the shape of the next six months is fairly clear.

Rates are likely to rise tomorrow. ANZ expects another hike in November, which would take the cash rate to 4.85 by Christmas. CBA does not expect a second rise, and points out that a 4.60 cash rate already leaves policy firmly restrictive. Its economists describe the housing market as in a significant downturn. When the banks start saying that out loud, the board is listening.

That tension is the key. Corrections tend to end not when rates start falling, but when buyers stop expecting them to rise. We are not there yet. Spring listings are building while demand thins. Expect further softness through the rest of the year, with the prestige segment still leading on the way down.

Could Sydney approach its record fall of 12.9 per cent? The top end is already within reach of it. The broader market has further to run if a second hike comes. If inflation turns in the next few months, the conversation changes quickly.

What this means for you

If you are selling, price to the market you have, not the one you remember. The vendors achieving results are those who meet the buyer early. Withdrawn auctions tend to come back later at a lower price. Presentation and campaign strategy matter more now than in any rising market.

If you are buying, this is the first time in years you have genuine leverage. You can negotiate terms, not just price. Get your finance approved on a rate at least a point above today’s. Buy the best property you can hold comfortably, not the most you can borrow.

If you are simply watching, watch three things. The RBA on 3 November. The quarterly inflation release in late October. And weekly clearance rates in the City and East region. When those three turn together, the market will turn with them.

Alan Weiss has worked in Sydney’s Eastern Suburbs property market for more than 35 years. For a confidential discussion about your property, contact alan@weissrealestate.com.au or 0412 176 074.