Sydney’s and Melbourne’s house price corrections continue to accelerate.
According to Cotality’s daily dwelling values index, home prices in Sydney and Melbourne have declined by 0.5% over the past 28 days, with the pace of decline steepening.
Both cities have recorded their sharpest declines since early January 2025, just before the Reserve Bank of Australia (RBA) delivered the first of last year’s three interest rate cuts.
Auction markets in Sydney and Melbourne are also weakening, as illustrated below.
Sydney’s average final auction clearance rate so far in April (51%) is the city’s weakest since the height of the COVID-19 pandemic in April 2020 (39%).
Melbourne’s average final auction clearance rate for April (54%) is the city’s weakest since July 2022 (also 54%).
The interest rate futures market expects the RBA to deliver two more 25 bp rate hikes this year, which would take the official cash rate to a 15-year high of 4.6%:
Recall SQM Research’s latest forecasts warning that if the official cash rate rises above 4.5% this year, then Sydney and Melbourne will experience home price declines of between -4% and -9% (i.e., scenario 2):
This week, amid the slump in auction clearance rates, SQM Research founder Louis Christopher told News.com.au that his price fall forecasts remain on track:
Louis Christopher said it was “a very, very bleak result” for the Sydney housing market.
“Our numbers are some of the lowest we’ve recorded since the Covid lockdown in 2020, when auction markets essentially collapsed in the lead up to lockdown,” he said. “What it tells me is that housing prices are falling in Sydney as we speak.”
SQM’s revised forecast for the year is that Sydney housing prices will fall by up to 6%.
“I would suggest we’re very much on track for that type of outcome,” Mr Christopher said…
For the Victorian capital, Mr Christopher said “it’s not a great result”.
“It’s certainly not as weak as Sydney’s, but we’ve been noticing that Melbourne’s clearance rates have actually been in a downtrend since August 2025,” he said.
“And it’s been a pretty persistent downtrend”.
Christopher added that the “immediate outlook is weak”, given the prospect of further rate hikes and budget changes to property tax concessions.
