Invest
Sydney predicted to avoid house price correction
House prices in Sydney are likely to “plateau and remain expensive” rather than experience a significant correction, according to Citi Research.
Sydney predicted to avoid house price correction
House prices in Sydney are likely to “plateau and remain expensive” rather than experience a significant correction, according to Citi Research.
The company says the “exceptional price growth” seen in Sydney’s housing sector in recent years is due to low exposure to the declining mining and manufacturing sectors combined with a low interest rate cycle, low unemployment and an excess demand for property, rather than evening out with growth in other states.
“There is also an argument that during the previous decade, prices for these other capital cities were improving while Sydney’s median price was only sideways, hence the current period is Sydney’s catch-up. This argument, while somewhat appealing, is incomplete,” the company said.
Citi Research said a significant correction in the housing market would likely require a “large sustained increase in unemployment”, which would be most likely triggered by an interest rate tightening cycle.
“However, households on average have substantial positive equity in their residential properties and mortgage repayment buffers that would take some time to unwind before forced selling occurred.
“The most likely scenario is that Sydney prices plateau and remain expensive unless there are some large, external, negative shocks to the economy.”
The forecast came as former CBA chief executive and Financial System Inquiry chair David Murray warned that the Australian property market is in an investor-driven bubble.
In an interview on Sky News earlier this month, Mr Murray said the Australian economy is vulnerable because “there is a bubble in the housing market”, which he likened to “tulip mania”.
“All the signs of a bubble are there. Many of the signs are the same as the Dutch tulips – people’s behaviours, people’s defensiveness about any correction in the market. If the economy tracks okay, it might turn out that this thing sorts itself out. But when those risks are there, something needs to be done about it in a regulatory sense. The RBA and APRA need to stay on it,” he said.
“We have more investors in the market than we have had historically. Those investors, even the ones on lower incomes, own multiple properties that are often cross-collateralised and they are the people who become forced sellers. That’s the risk to the system.”
RELATED ARTICLES
Property
Property advice goes rogue as risks and opportunities knock on every door
A warning from the Property Investors Council of Australia has put a spotlight on the surge of unlicensed financial advice around property strategies. This is no niche compliance issue—it’s a ...Read more
Property
Hidden cost, higher prices: Why a council fee fight matters for Australia’s housing pipeline
A dispute between the Housing Industry Association and Goulburn Mulwaree Council over development cost estimates is more than a local skirmish—it spotlights a systemic pricing lever that can compound ...Read more
Property
Why Aussie homes are turning into stepping stones for the new generation
A new cohort of buyers is treating their first property as a launchpad, not a destination—and the mortgage industry is pivoting in lockstep. Read more
Property
Rate cuts ignite an upsizing wave: how to win the next phase of Australia’s housing cycle
Cheaper money is reviving borrowing capacity and confidence, and upsizers are back in force — most visibly at auctions where clearance rates have lifted to yearly highs. The ripple effects extend ...Read more
Property
Rate anxiety fades, affordability bites: What Australia’s property market shift means for business
Australian buyers are no longer driven primarily by interest rate fears; the binding constraint is affordability. New research shows price pressure, not policy moves, is shaping behaviour—forcing ...Read more
Property
South Australia's first-home buyer boom fuels a frenzy for lenders, builders and retailers
South Australia has quietly become the nation’s most active first‑home buyer market, fuelled by falling rates, generous state incentives and a responsive broker ecosystem. Read more
Property
Melbourne’s turning point: the 2025 playbook for investors—and the 2026 upside
After lagging other capitals, Melbourne is quietly moving off the floor. Prices have logged several consecutive months of growth, rental markets remain tight, and forecasts point to a sharper upswing ...Read more
Property
Brisbane hits the million-dollar mark as growth takes a detour and investors eye new opportunities
Brisbane has crossed the symbolic $1 million median for houses, but the more investable momentum is in units—and the growth curve is flattening. Read more
Property
Property advice goes rogue as risks and opportunities knock on every door
A warning from the Property Investors Council of Australia has put a spotlight on the surge of unlicensed financial advice around property strategies. This is no niche compliance issue—it’s a ...Read more
Property
Hidden cost, higher prices: Why a council fee fight matters for Australia’s housing pipeline
A dispute between the Housing Industry Association and Goulburn Mulwaree Council over development cost estimates is more than a local skirmish—it spotlights a systemic pricing lever that can compound ...Read more
Property
Why Aussie homes are turning into stepping stones for the new generation
A new cohort of buyers is treating their first property as a launchpad, not a destination—and the mortgage industry is pivoting in lockstep. Read more
Property
Rate cuts ignite an upsizing wave: how to win the next phase of Australia’s housing cycle
Cheaper money is reviving borrowing capacity and confidence, and upsizers are back in force — most visibly at auctions where clearance rates have lifted to yearly highs. The ripple effects extend ...Read more
Property
Rate anxiety fades, affordability bites: What Australia’s property market shift means for business
Australian buyers are no longer driven primarily by interest rate fears; the binding constraint is affordability. New research shows price pressure, not policy moves, is shaping behaviour—forcing ...Read more
Property
South Australia's first-home buyer boom fuels a frenzy for lenders, builders and retailers
South Australia has quietly become the nation’s most active first‑home buyer market, fuelled by falling rates, generous state incentives and a responsive broker ecosystem. Read more
Property
Melbourne’s turning point: the 2025 playbook for investors—and the 2026 upside
After lagging other capitals, Melbourne is quietly moving off the floor. Prices have logged several consecutive months of growth, rental markets remain tight, and forecasts point to a sharper upswing ...Read more
Property
Brisbane hits the million-dollar mark as growth takes a detour and investors eye new opportunities
Brisbane has crossed the symbolic $1 million median for houses, but the more investable momentum is in units—and the growth curve is flattening. Read more
