Broker says property downturn creating opportunities for borrowers

Chambers said Sydney’s market was being shaped by a collision between unusually low housing stock and reduced borrowing power following the Reserve Bank’s rate increases during the first half of 2026.

“Some of the suburbs in this report have less than one month of housing inventory, which would normally put significant upward pressure on prices. But even in those markets, we’re forecasting price falls,” he said.

“That tells you how powerful the other force has become. Buyers simply can’t borrow as much as they could before the Reserve Bank started raising rates again.”

Chambers said that the resulting shift towards a mildly restrictive monetary-policy setting was now flowing through to Sydney’s auction rooms and private-treaty negotiations.

“Tight supply is cushioning the downturn, without it, prices would probably be falling more sharply – but right now it isn’t strong enough to overcome the reduction in borrowing capacity,” he said.

“The Reserve Bank has now moved to a mildly restrictive setting and we’re seeing the effects flow through the property market. Higher mortgage rates have reduced borrowing capacity, which means buyers simply can’t bid as aggressively as they could before.”

Buyers gain time and negotiating power

While price declines can unsettle existing owners, Chambers said the adjustment had created more workable conditions for purchasers than Sydney had experienced in several years.

“But that uncertainty can create significant opportunities for those willing to act – particularly upsizers. The discount they can negotiate on a more expensive purchase may substantially outweigh any discount they need to accept when selling their existing property,” he said.

He added that buyers now faced a market with more choice, fewer competing bidders, and greater opportunity to properly assess a property before committing.

“For buyers, this remains the most workable market we’ve seen in years. There is more choice, less competition at auction and more time to do proper due diligence,” Chambers said.

“But Sydney is made up of scores of distinct local markets, so buyers still need to focus on the fundamentals of individual suburbs rather than the city-wide headlines.”

Affordable areas show relative strength

The report divides Sydney into five quintiles based on the median house price of each region, then screens suburbs against asking prices, days on market, stock levels, and transaction volumes before ranking their expected six-month performance.

The selected suburbs are not necessarily expected to record price growth; rather, Shore expects them to hold up better than competing locations within their respective price brackets over the six months to February 2027.

In Heartland Sydney, Hebersham is forecast to be broadly steady, with house values easing by 1–2 per cent.

Milperra, in the Suburban Sydney category, is expected to decline by 5–6 per cent, but outperform similarly priced areas, supported by an owner-occupier share of 87 per cent.

Petersham is tipped to be the strongest performer in Rising Sydney despite an expected 4–5 per cent decline, with only one month of stock available.

Lilyfield and Bondi Beach are also forecast to outperform their respective Professional Sydney and Affluent Sydney cohorts, even as values are projected to fall by 6–7 per cent and 3–4 per cent.

Chambers said the lower-priced, higher-yielding segments were already demonstrating greater resilience.

“Those markets are already proving more resilient because buyers need smaller loans, while investors can benefit from stronger rental yields,” Chambers said.

“If borrowing capacity eventually starts increasing again, those fundamentals should put the affordable end of the market in a strong position.”

[Related: Housing downturn set to worsen as approvals collapse]