Sydney housing market update [video] | February 2026

Key takeaways

Sydney home values rose by 0.2% in January, reversing the 0.3% dip from December but remaining 0.1% below the previous market peak from November 2025.

Growth is being driven by the affordable end of the market with lower quartile house values rising 1.0% through the month while the upper quartile fell by 0.1%.

Extreme affordability constraints remain a major factor as Sydney median house values nudge 1.6 million dollars, concentrating buyer demand into entry-level price points.

Sydney’s housing market recorded a modest bounce back at the start of the year, with home values rising by 0.2% in January.

This follows a 0.3% dip in December, signalling a slight recovery in momentum.

However, the rebound was not enough to push values to a new peak, leaving the market 0.1% lower than the high point reached in November 2025.

The current growth is highly segmented, with the lower end of the market driving the gains.

While the premium sector remains flat or in slight decline, the more affordable segments are seeing intense competition as buyers navigate record-low affordability and high serviceability hurdles.

Sydney Market Performance

With median house values nudging the $1.6 million mark, the gap between the upper and lower quartiles continues to widen in terms of performance.

Source: Cotality, February 2026

Affordability and Serviceability Constraints

The primary challenge for the Sydney market remains the extreme deposit hurdle and ongoing mortgage serviceability.

Note: Sydney’s median house value is now nudging $1.6 million, making it the most expensive capital city in the country.

The stronger growth in the lower price points (1.0% rise in the lower quartile) reflects where first-home buyers and investors are concentrating their demand.

In contrast, the upper quartile house values slid 0.1% lower, suggesting that the top end of the market is more sensitive to the current high-interest-rate environment and stretched borrowing capacities.

Supply Dynamics and Future Outlook

Persistently low inventory remains the most significant tailwind for Sydney’s property prices.

Advertised stock levels are tracking significantly below the long-run average, which prevents a more material downturn in values despite the economic headwinds.

Source: Cotality, February 2026

Housing conditions in Sydney are expected to remain diverse, but are likely to lose further momentum.

The recent 25-basis-point rate hike in February and new APRA lending limits are expected to act as a natural ceiling on price appreciation through the remainder of 2026.

About Tim Lawless Tim is Research Director at Cotality (formerly CoreLogic), analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au