Earlier this month, the founder of SQM Research, Louis Christopher, forecast that Sydney home prices would decline by between -2% and -6% in 2026:
SQM’s “base case” forecast assumed the official cash rate would rise only once more this year, to 4.35%.
However, the latest pricing from the interest rate futures market suggests that the official cash rate will rise to 4.85% by the end of the year, a 16-year high:
As illustrated by scenario 2 above, SQM Research forecasts that Sydney home values would decline by -5% and -9% in 2026 under these interest rate settings.
Homebuyer sentiment fell sharply in Sydney in February, as did dwelling value growth:
Chart by Justin Fabo from Antipodean Macro
Two weekends ago, leading Sydney auctioneer Tom Panos declared that the “market has changed”, noting that “buyer depth is diminishing” and “fear is gripping the market” amid rate rises and inflation.
Last weekend, Panos warned that “it is super clear that we are changing direction in the marketplace and whilst buyers were chasing the market up, houses now look like they’re chasing the market down”.
He added that “more rate rises are coming”, and for that reason, Panos believes “that it probably will get more challenging”.
SQM Research recorded a final auction clearance rate of only 40.8% from 1,411 scheduled auctions last weekend.
Louis Christopher noted that “essentially three out of five scheduled auctions in Sydney last week were either rescheduled, withdrawn or passed in”.
“100% this is the weakest start to the Sydney property season since 2020, which was impacted by the outbreak of the plague”, Christopher added.
“100% Sydney housing prices are falling as we speak”.
Cotality’s daily dwelling values index for Sydney is still showing flat (0%) price growth over the past 28 days:
Given the rising interest rates and the global energy shock, it is only a matter of time before Cotality records price falls for Sydney.
