Is This the New Normal? Sydney’s Property Rollercoaster, Explained
Over the past three years, Sydney’s property market has taken us on a wild ride—surging highs, sharp falls, and an unexpected rebound. It begs the question: is this the new normal?
Since the onset of the COVID-19 pandemic in early 2020, the market has oscillated through fear, exuberance, correction, and recovery—all in rapid succession. As we now move through 2025, it’s worth looking back at the patterns and asking whether this is simply a new cycle—or a structural shift in how the market behaves.
The Pre-COVID Boom
Before the pandemic, Sydney’s housing market was already heating up. By the end of 2019, the median house value had risen 5.7% in the final quarter alone. Momentum carried into early 2020, with annual growth hitting 13.1% by March.
Then COVID hit—and everything paused. Transaction volumes dropped, and Sydney’s median property value dipped by -2.0%. But that lull didn’t last.
2020–2021: The Unprecedented Boom
Defying early predictions of a 20% decline, Sydney’s property market rebounded spectacularly. In Q4 2020 alone, house prices rose 4.8%. By the end of 2021, Sydney’s median house price had soared 33.1%, and apartments had climbed 8.3%, for a combined dwelling increase of 25.2% in just 12 months.
Domain data revealed this boom was moving at nearly double the speed of historical norms. Typically, booms last 33 months. This one delivered nearly 28% growth in just 16 months.
For context, during the 2000–2004 boom, national prices rose 76.4%, and another boom between 1995–2000 saw a 44.1% increase.
2022: The Sharpest Downturn in Recent Memory
Then came the correction. Even before the Reserve Bank of Australia began lifting interest rates in May 2022, prices were slipping. But rate hikes accelerated the fall.
Between February 2022 and January 2023, Sydney’s median dwelling value dropped by 13.5%—a significantly sharper decline than the historical average of -3% over nine months. In fact, it was one of the steepest and fastest downturns in recent market history.
To compare, the 1890s depression saw a 36% drop in values, while more recently, the 2017–2019 downturn wiped nearly 14% off median values over two years. But the 2022 fall was compressed and intense—an economic whiplash from the post-COVID boom.
2023 Onwards: Recovery Amid Rising Rates
Now, the market is rebounding—again.
Since January 2023, Sydney’s median dwelling value has risen 3.0%, with house prices up 3.2% and apartments up 2.3%. This is particularly remarkable given that interest rates have continued to climb, wages have stagnated, and inflation remains sticky.
By late 2023, the official cash rate had risen from 0.1% to 4.35%, while wages grew just 3.3% against a 7.8% increase in the consumer price index—meaning most households were effectively losing ground. Despite this, buyer confidence has begun to return, particularly in desirable, supply-constrained markets.
It’s not unprecedented. During the 2009–2010 rate hike cycle, interest rates rose from 3.0% to 4.75%, and yet Sydney’s median house values grew 12.7% in 2010. The difference now is that inflation is higher, and wage growth is weaker—creating a much tighter squeeze on households.
Sydney’s Long-Term Trend: Resilience
Looking at the big picture, the underlying fundamentals haven’t changed. Sydney still has:
A growing population
Limited new housing supply
High desirability, especially in premium suburbs
Long-term capital growth supported by structural demand
Yes, the recent cycles have played out faster and with more volatility than in the past—but the direction, over time, remains upward.
The Bottom Line
The Sydney property market’s “new normal” may involve faster cycles, sharper corrections, and quicker recoveries—but the core drivers of value remain.
If you’re buying or selling in Sydney’s Eastern Suburbs, timing and strategy are more important than ever.
Let’s talk. With 35 years of real estate experience, I’ll help you navigate the market with clarity and confidence.
