Sydney and Melbourne house prices are collapsing

The nascent house price correction underway across Sydney and Melbourne is gathering pace according to the latest data from CoreLogic.

CoreLogic’s daily dwelling values index, which captures price changes across the five major capitals, fell by 0.15% in the week ended 26 May – the third consecutive week of decline:

Weekly Australian house price change

The decline at the 5-city level was once again driven by Sydney and Melbourne, where values fell 0.36% and 0.17% respectively. The decline across these two major markets more than offset value gains elsewhere:

Weekly Australian house price movements

So far in May, Sydney and Melbourne dwelling values have fallen by 0.82% and 0.51% respectively. This more than offset price growth across the other major capitals, with values at the 5-city level down 0.26%:

May Australian house price values

Over the quarter, values across Sydney and Melbourne have fallen 1.3% and 0.6% respectively, but were more than offset by value gains elsewhere. Accordingly, values are 0.4% higher over the quarter at the 5-city level:

Australian quarterly dwelling value growth

Finally, Sydney and Melbourne dwelling values are down 0.7% and 0.4% respectively over 2022. However, these falls have been more than offset by strong growth across the other major markets, which has driven values 1.5% higher at the 5-city level:

2022 Australian house price growth

Given Sydney and Melbourne has Australia’s most expensive housing and most indebted households, it stands to reason that these two markets will also be most sensitive to interest rate rises.

Therefore, both markets should experience the largest housing downturns, and lead the nation’s housing correction, as the Reserve Bank tightens monetary policy.

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. Fortunately we’ve got again Tanya Plibersek as the housing minister. She knows exactly what she’s doing.

    • More first home buyer bribes it is then! She was housing minister in the Rudd Government.

      • I never know if Tezza is being ironic. But I do know that the vapid Plibersek can be guaranteed to be captured by the developers and the housing industry. At least the Chalmers-Plibersek ticket never came to fruition.

        • Arthur Schopenhauer

          can be guaranteed to be is captured…

          Edit: Fortunately they are only a scandal prayer room or two from minority government.

  2. ErmingtonPlumbingMEMBER

    My mate who sold up and went to Queensland is talking about buying back into Sydney if prices drop by more than 30%
    He only sold his Sydenham place in November!

    • reusachtigeMEMBER

      Ewwww, Sydenham. That place still stinks of working class storeman and packers doused in jet fuel although a better class of unsuccessful white collar workers are moving in as they move out.

      • ErmingtonPlumbingMEMBER

        Yes he did sell to a “better class” of white collar types.
        I’m gunna miss going over there, drinking beers out the back and watching the planes coming in to land.
        They were very low by his place and at about a 45* angle above and so close someone with a good arm could probably get a cricket ball into an engine.
        My kids liked the smell of the jet fuel and being able to see the people looking out the windows at us as they flew by.
        Fun times.
        Itd be nice if they buy the same place again and move back

        • The Travelling PhantomMEMBER

          I remember him, the guy with the jacuzzi at the back and you watching the planes descending

  3. Holiday In ScomodiaMEMBER

    Homebuilder->Cooks the construction sector->slows up supply just as demand drops due to IR rises->puts floor under built property existing prices-> continuing white hot rental market means any owner in trouble can move in with folks, rent out their place and avoid selling at loss/repo-> bank balance sheets dont show the mess, allows them to continue to get cheap funding->open teh gates->rental demand stays super tight-> IR creeps up dip in price= less FHBs and owner occs bidding emotionally, rents pumping= investors back in the market-> eventually owner occs and FHBs get some grants or wage rises to bid back into thing-> everyone continues to lemming into the market for a roof over their head to avoid the nightmare of renting/to make self fulfilling gains in the unkillable asset class——-> housing market don’t crash… rinse and repeat… always repeat…

    • Nah the Davos set are implementing their great reset as we speak. Central Bankers will now see inflation and keep hiking into a depression. You will own nothing and be happy. Nations must not resist the pain!

      • Nah they don’t have the stomach to hike into a recession. Watch them do an about face and reverse course when the recession starts to bite. It’ll be a tough situation for the central banker’s cred tho, since inflation will likely still be high when we go into recession.

  4. Perth will grow over the next 5 years. The gap is too big. The others will drop. Sydney the most, then hobart, then adelaide then brisbane, and melb stagnate as never realky took off in covid like the others.

  5. Goldstandard1MEMBER

    All expected. I also expect Sydney and Melbourne to lose 1-2%% per month at least for about 12 months then continue lower slower after that. The others will follow a similar pattern given the dumb money that went to Brisbane and Adelaide.

    • I know quite a few people who sold up in Sydney for ‘equivalent’ upmarket Brisbane suburbs. All with young families of course but even if they miss the city or their Sydney job becomes to hard from Brisbane they wont be leaving. Kids in school, luxury house or house under construction and they are either mortgage free or pretty close.

      Sure there will be some reversal… always is, but I doubt it will be anything like the original net increase. Can’t speak for Adelaide but commercially speaking, they are not comparable cities.

      • ChristopherMEMBER

        I did the same thing, sold Melbourne in the pandemic moved regional. Tiny amount of debt on the property which we took because we got 3 years fixed at 1.99% which we will easily 100% settle when it comes time to go variable.

        No going back now, my wife has picked up a great job in the local area and I will do the same when I get sick of working for a US multinational.

          • ChristopherMEMBER

            We were living in the middle Western suburbs and it become extremely obvious in order to improve our lifestyle we would have had to go in to around $1M in debt to get what I would term a decent house in Melbourne’s eastern suburbs.

            This is despite owning outright debt free a $1.1M house in the west (sale price), two people on large incomes – hello Div 293 taxes that get lauded here regularly.

            So the choice was clear, strap ourselves to the grind for another 20 years or get off the wheel and move out.

            Now I live a 15 minute walk from a great surf beach, 10 minute drive to a bunch of great wineries, Geelong is just around the corner and to be frank Melbourne isn’t even far away when you want to hit the city.

            Madness is people staying in our capital cities looking at a bleak future.

          • Goldstandard1MEMBER

            Context: Not dumb money to move for lifestyle – dumb money in terms of the ‘increase amounts’ as it will reverse.

  6. Real Estate speculation is a social cancer, and cancer usually wins the war.
    The disease weakens you, the medicine sickens you, the operation cripples you and in the end cancer wins anyway.
    We’ve had the denial period “I don’t have cancer”
    We’ve reconciled ourselves to the medical facts ” we do have cancer”
    We’ve argued that treatment is not necessary
    We’ve accepted the treatment is necessary, but we secretly spat out the medicine
    We’ve accepted the Surgeon’s knife and allowed body parts to be hacked off in the vain hope that the core is healthy
    We’ve gotten the bad news, it’s stage 4, it’s malignant, it’s spreading wildly, it’s too late to do anything just enjoy the morphine.

  7. rob barrattMEMBER

    Collapsing is a relative term. I paid 75K for a 3 bedroom house in Adelaide (Flagstaff Hill. Not a bad or high crime area) when I arrived in 1991. The average annual wage was somewhere around a third of that. So, a P/E ration of about 3. Of course that was when Aus actually manufactured things. Mitsubishi, Toyota etc etc.
    Now of course the Aus economy is spelt “house prices” and the Adelaide P/E ratio is around 8 – 9.
    Boy are we booming!!!.

    • Interesting, but that is why this week index data is pretty useless. Even those two properties, the one that just sold is mostly identical but not totally (different fit outs at to my eye potentially inferior) so a ~4.5% fall between peak FOMO and now isn’t too bad a result.

      Yep, only 1 rate rise but that rate rise + fixed rates has clearly signalled to the market that more are coming so I don’t think its a linear impact (i.e the first talk of rise, the jump in fixed rates and actual rate rise has a larger impact than the next 3 will).

      It’s a buckle up and see, though balance of probabilities suggests that the bear porn crew are going to be disappointed again.

    • Goldstandard1MEMBER

      Melb same mate. I’m talking inner East too so blue chip. Dowen 10%+ right now Vs March 22

  8. Collapse….more like i mild dip….you can always trust a Macrobusiness headline to exaggerate the truth