Page 2 – Top 5 rankings for all five quintiles
Page 4 – How did the forecasts from six months ago turn out?
Page 6 – Media release / commentary
Page 8 – Key stats on the Top 5 suburbs for Heartland Sydney (quintile 1)
Page 11 – Key stats on the Top 5 suburbs for Suburban Sydney (quintile 2)
Page 14 – Key stats on the Top 5 suburbs for Rising Sydney (quintile 3)
Page 17 – Key stats on the Top 5 suburbs for Professional Sydney (quintile 4)
Page 20 – Key stats on the Top 5 suburbs for Affluent Sydney (quintile 5)
Page 23 – FAQ for journalists
Sydney house prices have eased during 2026, but the more affordable end of the market is proving notably resilient, according to the Shore Financial State of Sydney Report.
The half-yearly report divides Sydney’s 600-plus suburbs into five quintiles based on the
current median house price of the region they sit in:
● Quintile 1 = Heartland Sydney
● Quintile 2 = Suburban Sydney
● Quintile 3 = Rising Sydney
● Quintile 4 = Professional Sydney
● Quintile 5 = Affluent Sydney
The report then identifies the five suburbs in each category that are best placed over the next six months.
Suburbs are first screened on asking prices, days on market, inventory levels and sales volumes. Those that pass are ranked on expected performance over the following six months.
In Hebersham (Heartland Sydney), house prices are forecast to be close to flat over the six months to February 2027, easing by 1-2%.
Milperra (Suburban Sydney) is expected to experience a price decline of 5-6%, yet outperform other suburbs in its price bracket, supported by a high owner-occupier rate of 87%.
Petersham (Rising Sydney) prices are forecast to fall 4-5%, but the suburb is likely to be the strongest performer in its category due to limited housing supply – there’s just one month of stock on the market.
House prices are also tipped to fall by 6-7% in Lilyfield (Professional Sydney) and fall by 3-4% in Bondi Beach (Affluent Sydney), yet the suburbs should still outperform others in their price bracket. Again, supply is key, as both markets have less than one month of available stock.
Shore Financial CEO Theo Chambers said the market was being pulled in opposite directions by unusually tight supply and constrained borrowing capacity.
“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.
“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.”
The Reserve Bank’s 0.75 percentage points of rate rises during the first half of 2026 –followed by two consecutive holds – have significantly changed conditions for Sydney property buyers, according to Mr Chambers.
“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,” he said.
“There are now signs those higher rates are doing their job. Headline inflation fell from 3.8% in June to 3.5% in July, while unemployment has gradually increased from 4.1% in January to 4.5% in July.
“But the inflation problem hasn’t disappeared. Trimmed-mean inflation was still 3.6% in July and has been above the Reserve Bank’s 2-3% target range since July last year. The labour market has softened, but remains relatively tight.
“So while the softer jobs market and improvement in headline inflation have reduced the near-term risk of another rate rise, the Reserve Bank still has a tightening bias and another increase can’t be ruled out.
“Looking further ahead, rates may start falling in 2027 if inflation continues moving in the right direction. When that eventually happens, I’d expect the more affordable, higher-yielding parts of Sydney to be among the first to respond.
“Those markets are already proving more resilient because buyers need smaller loans, while investors can benefit from stronger rental yields. If borrowing capacity eventually starts increasing again, those fundamentals should put the affordable end of the market in a strong position.
“Consumer confidence and sentiment are also playing an important role alongside reduced borrowing capacity. Many buyers simply lack the confidence to make a decision in the current environment.
“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.
“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. 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.”
The half-yearly Shore Financial State of Sydney Report divides Sydney’s 600-plus suburbs into five quintiles (based on prices):
● Quintile 1 = Heartland Sydney
● Quintile 2 = Suburban Sydney
● Quintile 3 = Rising Sydney
● Quintile 4 = Professional Sydney
● Quintile 5 = Affluent Sydney
Suburbs are assigned to different quintiles based on their current median asking price for houses.
First, suburbs are excluded if they don’t meet certain benchmarks and trends related toasking prices, days on market, inventory levels and sales volumes over the previous three months. Second, the remaining suburbs are ranked based on expected growth in asking prices over the next six months.
The reason is that suburb-level data can be volatile and sometimes unreliable. That’s because suburbs may have a small number of property transactions over a 12-month period, meaning the sample size may not be large enough to form reliable conclusions. This problem is solved by focusing on the entire SA3 region, rather than just the individual suburb.
The Australian Bureau of Statistics refers to a cluster of suburbs as a ‘statistical area 3’, or a ‘SA3’. SA3s often closely align to local government areas.
Forecasts are made based on a proprietary machine-learning formula, which involves analysing movements in inventory levels, days on market and asking prices over the previous 24 months.
No. Sophisticated data analysis has found these suburbs are likely to rise in price and outperform the market over the next six months – but nothing can be guaranteed.
The data comes from Suburbtrends, a property research consultancy that is regularly quoted by the media, and the Australian Bureau of Statistics.
Information has been sourced from Suburbtrends (covering the 24 months to August 2026) and the Australian Bureau of Statistics’ most recent published census (2021).
Days on market is the median amount of time it takes to sell properties in a particular location. The median is the middle number. So if five properties were sold in 38, 41, 47, 58 and 99 days, the median days on market for those five properties would be 47 days. When days on market are falling, that means it’s becoming harder for buyers to find properties. That means they have to compete harder, which puts upwards pressure on prices.
The median asking price is the median for-sale price of all the properties listed for sale in a particular location. The median is the middle number. So if, for example, five properties were listed for sale at $346,000, $418,000, $611,000, $686,000 and $829,000, the median asking price for those properties would be $611,000. When the median asking price is rising, that suggests vendors are becoming more confident.
Inventory levels is the amount of time it would take to sell all the houses or units in a particular location, if houses/units kept selling at the current rate and no more houses/units were added to the market. So if a location had 4.7 months of unit inventory, and units kept selling at the current rate and no more units were added to the market, the backlog of units would be fully sold in 4.7 months. When inventory levels are falling, that means it’s becoming harder for buyers to find properties. That means they have to compete harder, which puts
upwards pressure on prices – although it doesn’t guarantee prices will rise.
When inventory levels are that low, the data can be very volatile and therefore unreliable. So it’s more appropriate to say “under 1 month” rather than give a specific number.
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