Sydney’s housing market now shows two very different stories playing out at once. On one side, standalone homes under roughly $1.2 million are attracting first home buyers and budget conscious upgraders who can tap into the federal 5% deposit scheme. On the other, premium homes starting from around $2.3 million are seeing softer demand as buyers bump up against higher borrowing costs and stricter budgets even though headline growth across the city looks flat.
Fresh data from a major property analytics firm suggests more affordable Sydney houses rose about 0.8% in February, while the top tier segment slipped around 0.9% over the same month. Over the past year, values in the lowest quarter of the market have climbed by roughly 12.7%, more than double the gain across greater Sydney overall which sits near 6%. Property analysts point to this widening gap as evidence that affordability constraints are funnelling demand into lower price brackets while higher end homes bear the brunt of rate hikes and buyer caution.
Zooming out nationally, the picture looks uneven. The two largest cities, Sydney and Melbourne, are effectively pausing with zero growth in February after small increases in January and mild falls back in December. At the same time, mid sized capitals are still charging ahead. Perth posted about 2.3% growth in a single month and roughly 22% over the year while Brisbane and Adelaide also notched solid monthly gains of about 1.6% and 1.3%. Normally a slowdown in Sydney and Melbourne might foreshadow weaker conditions elsewhere, but very low stock levels in those smaller capitals seem to be keeping prices on the move, at least for now.
Listing activity helps explain some of the tension. In Sydney and Melbourne, the number of newly advertised homes is now notably above the five year average, roughly 9.7% higher in Sydney and nearly 12% higher in Melbourne. That jump suggests more owners are choosing to sell ahead of any further rate rises or demand softening, particularly as auction clearance rates ease. If usual seasonal patterns hold, new listings are likely to build further into Easter which could test how much buyer demand is really left at current price levels.
Melbourne shows a similar split between cheaper and expensive homes, just at lower price points. Properties in the city’s most affordable quarter, up to roughly $792,000, inched up about 0.2% in February while houses in the top quarter, starting around $1.39 million, slipped by roughly 0.4%. Other capital cities are still trending upward, with Hobart gaining about 1.2%, Canberra around 0.8% and Darwin about 0.2%, contributing to an overall combined capitals growth rate of roughly 0.6% for the month.
Regional markets look like the quiet winners in this phase of the cycle. Inland hubs such as Toowoomba in Queensland, Geraldton in Western Australia and New England in northern NSW have seen annual price growth in the high teens to around 20%, outpacing many coastal and holiday destinations that boomed during the pandemic. Analysts link this strength to a clear affordability edge. Buyers, especially younger households, are trading proximity to big city jobs or beaches for the chance to actually own a home, and that steady demand is helping these regions hold their value growth more reliably than the capitals.
