Sydney suburbs where house prices fell - and rose - most this year

House prices have fallen over the past year in a string of sought-after Sydney suburbs where the typical house costs $2 million or more.

Fewer potential buyers have been able to purchase in these areas in an environment of high interest rates, leading to downturns approaching 10 per cent in a year, CoreLogic figures show.

House prices have fallen in Zetland this year.Credit: Rhett Wyman

The drops have been steeper than in Sydney overall, where home values have fallen just 0.5 per cent over the spring and remain 3.3 per cent higher than a year ago.

Zetland houses recorded the biggest fall – down 9.7 per cent in the 12 months to November.

It was followed by a mix of higher-priced suburbs right across Sydney, from Cronulla (down 8.6 per cent) and Bellevue Hill (down 8 per cent) to Rodd Point (down 7.9 per cent) and Pagewood (down 7.5 per cent).

North Manly, Waverley, East Ryde and Forest Lodge all fell by at least 6 per cent.

CoreLogic head of research Eliza Owen said Sydney had 22 consecutive months of rising values, then edged lower in October and November.

“The high end of the market has definitely led Sydney into a decline,” Owen said.

“An economic and interest rate environment like the one we’re in now really thins out the higher end of the buyer pool, so you just get fewer people who can afford to buy into these areas.”

She added that the spring selling season was usually strong for seasonal markets such as the eastern suburbs and the northern beaches, but this year the extra homes for sale could not find enough buyers.

“It’s possible the additional supply you get over spring compounded losses against weak buyer demand during the period,” she said.

Sydney Sotheby’s International Realty managing director Michael Pallier had noticed buyers in Bellevue Hill were not always willing to pay as much as sellers were asking this spring, but he said there were still many buyers around and some very strong sales.

For example, Bellevue Hill marked an $80 million sale this winter when lifestyle blogger Stephanie Conley-Buhre sold her home for about $50 million more than she paid for it in 2021 after a no-expense-spared renovation.

Pallier thought the prices of luxury homes were coming off a very high base the previous year and remained strong even if they were about 8 per cent or even 10 per cent annually.

“It might have overrun – it went a bit too high and it’s come back to a more sensible level,” he said. “The new properties came on the market for spring – we could notice quite quickly the buyers weren’t at the levels many of the vendors were hoping for.

“If you dropped your price that 8 to 10 per cent, there was still plenty of activity.”

Elsewhere, house prices have soared in some of Sydney’s more affordable suburbs, especially in the west and south west.

Owen said Sydney’s gains have been driven by lower-priced pockets.

“Even though they don’t look affordable – there’s only two house markets on the Sydney list [of biggest rises] that are under $1 million, but under $1 million is a rarity in Sydney,” she said.

“Areas of the south-west and west are the pockets where most buyers can get into the market in Sydney right now.”

Bonnyrigg topped the list with a steep annual gain of 19 per cent, but remained at a median house value of $1.08 million. Bonnyrigg Heights rose 17.4 per cent.

There were rises of at least 15 per cent in Wiley Park, Emerton, Mount Pritchard, Lansvale, Tregear, St Johns Park, Wetherill Park and Edensor Park.

Blaze Real Estate director Blaz Dejanovic said the lower-priced entry point into the Sydney market had been attracting buyers to the south-west, adding that new migrants congregated in tight-knit communities.

He thought newer developments and subdivisions had raised prices, while many homeowners have been adding granny flats and selling their houses for higher prices.

“A lot of these buyers that are buying these houses for $1 million, they’re building these 60-square-metre granny flats and getting a return of $550, $600,” he said.

“So when it does get sold to the next person, they’re selling it for $1.5 million.”

He said there was some pressure on homeowners who had bought in the past three years as they hope for interest rates to go down. He thought the first half of the year had been stronger for the market and there had been some easing in growth in the second.

“Stock levels have been quite high in the last six months, which is why we’ve seen a softening of the market – I wouldn’t say drop.”